Equinix, Inc.

Q3 2019 Earnings Conference Call
10/30/2019

Operator

Conference Operator

Good afternoon and welcome to the Equinix third 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.

Katrina Reimel

Vice President of Investor Relations

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 August 2, 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 a 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.

Charles Myers

CEO and President

Thank you, Katrina. Good afternoon, and welcome to our third quarter earnings call. We had our best-ever third quarter bookings, reflecting strong execution of our strategy and demonstrating our ability to deliver clear and quantifiable value to our customers as they pursue their digital transformation agenda. Our retail business continues to thrive, generating over 4,400 deals in the quarter across 3,100 customers, with the majority of our bookings comprised of small to mid-sized multi-metro deals, fueling one of the strongest interconnection quarters in our history. We're executing effectively on our commitment to unlock the power of platform equinix for our customers, expanding our geographic reach, enhancing our market-leading interconnection portfolio, and responding to evolving customer needs with the launch of new and innovative edge services offerings. By focusing on driving enhanced operating leverage in the business, we're enabling investment across our traditional retail business while layering in incremental capabilities, which together will drive higher attach rates, reduce churn, and sustain enhanced cabinet yields over the coming years, allowing us to continue to deliver industry-leading returns. We are aggressively activating our channel, combining the value of platform economics with partner solutions to accelerate our customers' journey to hybrid and multi-cloud as the clear architecture of choice. We outgrew the market globally with notable momentum in EMEA, and Equinix now holds the number one position in 18 of the 25 countries in which we operate. And we continue to extend our global reach, announcing our plans to enter Mexico, the second largest economy in Latin America, with two new markets serving Mexico City and Monterey. In tandem with our strong operating performance, we're advancing a bold sustainability agenda with meaningful progress across environmental, social, and governance aspects. We've made significant progress on our goal to use 100% clean and renewable energy for our data centers, with over 90% of our energy consumption today now covered by renewable sources. We were recognized by the U.S. EPA for our leading green power use, ranking number four on the EPA's national top 100 partners list, and receiving the Green Power Leadership Award for the third consecutive year, recognizing our contribution in advancing the development of the nation's voluntary green power market. During the quarter, we also announced the addition of Sandra Rivera to our board of directors and the hiring of Justin Desaide as our new CTO. We are thrilled to add their deep and diverse experience as world-class technology leaders as we continue to refine and expand our vision for the future of Platform Equinix. Turning to the quarter, as depicted on slide three, revenues for Q3 were $1.397 billion, up 8% year-over-year. Adjusted EBITDA was up 9% year-over-year, and AFFO was ahead of our expectations, excluding FX and FX-related impacts. Interconnection growth, again, outpaced co-location revenues, growing 13% year-over-year, driven by solid traction across all interconnection products and particularly strong momentum across our cloud exchange fabric. These growth rates are all on a normalized and constant currency basis. In October, we closed our first hyperscale JV, a greater than $1 billion deal with GIC, the Singaporean sovereign wealth fund, This is a strategic milestone for Equinix, enhancing our ability to respond to the rapidly expanding needs of the world's largest cloud and hyperscale companies while strengthening our leadership in the cloud ecosystem. We look forward to launching similar JVs in other operating regions and believe these efforts will continue to further differentiate Equinix as the trusted center of a cloud-first world. We now have over 356,000 interconnections, adding more per quarter than our top 10 competitors combined. In Q3, we added an incremental 8,500 interconnections with high gross ads from both enterprise and network segments accompanied by lower-than-expected churn. We also surpassed 20,000 virtual connections, more than 5% of our overall count, and we expect these connections, which are dynamic and operationally efficient, to accelerate as customers leverage the capabilities on our SDN-enabled ECX fabric. With over 1,800 customers now on ECX Fabric, we're seeing the strong ecosystem effects driven by expanding use cases, including WAN re-architecture, distributed data, and rapid adoption of hybrid cloud across an increasingly rich range of cloud destinations. We also saw growth of our internet exchange in existing and new markets, with 27% year-over-year increase in IX provision capacity. Our newly launched Network Edge product is generating strong market interest with a robust pipeline. This offer provides enterprises a faster and more efficient way to deploy virtual network services at Equinix, including routers, firewalls, and load balancers from their technology providers of choice, including Cisco, Juniper, and Palo Alto networks. Now let me cover highlights from our verticals. Our network vertical experienced record bookings, led by the major telco subsegment and significant global NSP reseller activity as we partner with global providers to evolve their architectures and serve rapidly expanding enterprise demand. New wins and expansions included Silicon Networks, a leading fiber optic provider, optimizing network to support growing customer demand, and Telia, a Nordic provider extending coverage with regional edge deployments. Our financial services vertical achieved robust bookings and strong new logo growth with an uptick in the banking subsegment as firms continue to embrace digital transformation. Key new wins included Sterling Bancorp, re-architecting the network to securely connect to partners, and a U.S. exchange startup leveraging the depth and reach of our expansive electronic trading ecosystem. Our content and digital media vertical produced solid bookings led by strong growth in publishing, advertising, and video subsegments. New wins and expansions included a global social media firm upgrading infrastructure to support their growing product line, as well as a leading global ad tech firm transforming network topology to distribute and analyze data. Our cloud and IT vertical continues to over-index with strength in the security sub-vertical, as well as a strong increase in ECX fabric participants as cloud consumers diversify towards hybrid and multi-cloud architectures. We continue to lead in cloud connectivity with over three times as many metros with multi-cloud on-ramps as our nearest competitor. Our enterprise vertical experienced diversified growth across professional services, retail, as well as notable strength in government. New wins included Pruitt Health, deploying on-platform Equinix to support its growing healthcare ecosystem, Steve Madden, re-architecting network and connecting to multi-cloud to better enable digital business, the Myers-Briggs Company, optimizing network and interconnecting to business partners to support data management requirements, as well as further expansions from Walmart, deploying distributed infrastructure to support AI use cases. And our channel team had another great quarter, accounting for more than 30% of bookings with 60% of this activity being going into our enterprise vertical as we use the reach and relationship of our partners to efficiently expand our addressable market. We saw partner wins across all end-user types, including insurance, federal government, banking, public utilities, and pharma, with network optimization and hybrid multi-cloud as key use cases. New channel wins this quarter included a multi-partner win with Presidio, F5, Microsoft, and Oracle for a large U.S. energy company supporting their data center consolidation and implementations of hybrid and multi-cloud access. Now, let me turn the call over to Keith to cover the results for the quarter.

Keith Taylor

Chief Financial Officer

Thanks, Charles, and good afternoon to everyone. Let me start my prepared remarks by saying we remain very pleased with the performance of our business and how Platform Equinix is differentiating us from others in our space. We continue to successfully scale the core business while simultaneously investing in our future, both as it relates to our operating structure and our new products and services. and we continue to invest in sustainability and diversity, inclusion, and belonging initiatives, two areas that are very dear to our communities, our customers, and our employees. We had another solid quarter with our operating results consistent with our expectations, although impacted by FX and FX-related items. From a bookings perspective, we had our best ever Q3 gross bookings performance, including very attractive deal mix and strong pricing. Interconnection activity was very strong, both at the physical and the virtual level, and we're making good progress across our new edge services. Again, we had net positive pricing actions this quarter. As a result, our MRR per cabinet metric remained firm both on an as-reported and FX neutral basis. In early October, we closed our first hyperscale joint venture in EMEA and transferred two of our operating assets into the JV, London 10 and Paris 8. As a result, the joint venture distributed a net $355 million of cash to Equinix, and we expect an additional €60 million over the next four quarters as certain contingent milestones are met. And we continue to expand our global platform with 28 projects underway across 21 metros and 16 different countries, another critical point of separation compared to other companies in our space. Now let me cover the quarterly highlights and note that all growth rates in this section are on a normalized and constant currency basis. As depicted on slide 4, global Q3 revenues were $1.397 billion, our 67th straight quarter of top line growth, up 8% over the same quarter last year and at the midpoint in our guidance range on an FX neutral basis. In the quarter, we experienced an unusually high level of FX volatility. largely derived from the Brexit implications to both the British pound and the euro. Also, the Brazilian real weakened considerably, a currency that is typically too expensive to hedge. As previously guided, there were a number of one-off events that impacted the quarter-over-quarter revenue step-up, including lower tenant recoveries from a favorable tax decision in Q3 related to our Infomart Dallas assets. and then lower than expected non-recurring revenues. Q3 revenues net of our FX hedges included an $8 million negative FX impact due to the stronger US dollar in the quarter when compared to the prior guidance rates. Global Q3 adjusted EBITDA was $675 million, up 9% over the same quarter last year despite higher seasonal utility costs and the expansion drag. Q3 adjusted EBITDA was better than expected, primarily due to lower maintenance costs. Q3 adjusted EBITDA performance, net of our FX hedges included a negative $4 million FX impact when compared to the prior guidance rates. Global Q3 AFFO was $473 million, an 18% increase over the same quarter last year, above our expectations on a cost and currency basis, while still absorbing the higher than anticipated increase in our recurring capex. Also, AFFO, on an as-reported basis, absorbs a net $16 million higher-than-planned income tax expense attributed to FX-related tax gains from our hedging program. Based on the current FX exchange rate through October, we expect a significant portion of this tax expense to reverse in Q4 and, accordingly, has been reflected in our AFFO and AFFO per share guidance. Q3 global MRR churn was 2.3%, consistent with our targeted range. For Q4, we expect MRR churn to remain in our guided range of 2% to 2.5%. Interconnection revenues increased significantly over the prior quarter with momentum in each of our regions. Interconnection revenues now represent greater than 17% of our recurring revenues, a significant quarter-over-quarter step up. Our interconnection portfolio grew at a healthy pace. driven by strong net adds from both the physical and the virtual connections, while also provisioning significant incremental port capacity. The Americas and EMEA interconnection revenue stepped up to 24 and 10 percent of recurring revenues, respectively, while APAC was 14 percent. Turning to the regional highlights, whose full results are covered on slides five through seven. APAC and EMEA were our fastest MRR growing regions at 13 and 12 percent, respectively, on a year-over-year normalized basis. followed by the Americas region at 4%. The Americas region saw continued strong bookings with a high mix of small deals, healthy pricing, and strong new logo ads. And export bookings to the other two regions continues to remain at a high, as the Americas region does an excellent job of selling across our global platform. And our new federal segment had a stellar quarter, and we remain very excited about the potential opportunities we see across this customer set. Our EMEA region had another very strong quarter led by our German and French businesses, including strong network service provider activity. EMEA had a robust increase in billable cabinets, firm deal pricing while experiencing its best ever net cross-connect ads in the quarter. And we opened up capacity in three new markets in EMEA, Helsinki, London, and Stockholm. And the Asia-Pacific region showed continued momentum over the quarter despite the U.S. trade dispute with China and the unrest that we see in Hong Kong. We enjoyed strong bookings in both our Hong Kong and Singapore businesses, and we opened our first data center in Seoul, South Korea, entering into one of the most vibrant digital economies in the world, our 25th country to operate from. To date, the Seoul business is tracking ahead of its bookings plan. And now looking at the capital structure, please refer to slide 8. Our unrestricted cash balance is approximately $1.4 billion, lower than the prior quarter as the operating cash flow and proceeds from the ATM program were more than offset by our quarterly capital expenditures and our cash dividend. Our net debt leverage ratio was 3.5 times our Q3 annualized adjusted EBITDA, up slightly due to the lower cash balance, yet still well within our targeted range. As a new investment-grade rated company, and given the current interest rate environment, we expect to drive substantial interest rate savings through the refinancing of our currently outstanding debt. as well as enjoy a lower cost of borrow on any new incremental capital raised to fund our future initiatives. At the end of Q3, our liquidity position, alongside the strong balance sheet, continues to provide us a strategic and unmatched business advantage. Turning to slide 9, for the quarter, capital expenditures were approximately $557 million, including a recurring capex of $47 million. Q3 had six new expansion projects completed, adding 2,800 cabinets of capacity, including new IBXs in Helsinki and Seoul. And we continue to expand our land bank, acquiring land for development in Tokyo and Warsaw. Our capital investments delivered strong returns, as shown on slide 10. Our 136 stabilized assets increased revenues 3% year-over-year on a constant currency basis similar to last quarter. Our stabilized assets are collectively 85% utilized, and generate a 30% cash on cash return on the gross PP&E invested. And now please refer to slides 11 through 15 for updated summary of 2019 guidance and the bridges. For the full year of 2019, on a constant currency basis, we're maintaining our full year revenue guidance while raising our adjusted EBITDA guidance by 6 million due to strong operating performance. This guidance implies a revenue growth rate of 9% over the prior year and a healthy adjusted EBITDA margin of approximately 48%. Also, we're reducing our 2019 integration cost to now be $9 million. And given the strong operating performance, we're also raising our 2019 AFFO by $8 million, where our growth rate will range between 13% and 14% compared to the previous year on a normalized and constant currency basis. We do expect slightly lower net interest expense in Q4. AFFO per share is expected to grow 8%, including the dilutive impact of both our Q1 equity raise and the effects of the ATM program activity. We've assumed a weighted average 84.8 million common shares outstanding on a fully diluted basis. And finally, we expect our 2019 cash dividend to now approximate $825 million. a 13% increase over the prior year, and reflects an 8% year-over-year increase on a per-share basis. So with that, I'm going to stop, and I'm going to pass it back to Charles. Thanks, Keith.

Charles Myers

CEO and President

In closing, we had another great quarter, building on our unique sources of competitive advantage and demonstrating the underlying strength of our business. We continue to separate ourselves from the competition using our diverse go-to-market channels and our expansive balance sheet as tools to extend the scope, scale, and velocity of our flywheel business. while partnering with world-class players like GIC to enable us to simultaneously capture strategic footprints and deliver attractive returns in the hyperscaler market. We also continue to build new capabilities that will allow us to achieve our vision for the future of Platform Equinix, a future that will allow our customers to reach everywhere, connect with everyone, and integrate everything on their digital transformation journey. I am extremely pleased and privileged to work with our team of over 10,000 focused on building out our products and platforms and executing against an ambitious set of priorities in service to our customers, all while steadfastly ensuring that our culture continues to thrive, making sure that we have the right people in the right roles at the right time, building a company that is positively impacting our world and where every employee can confidently say, I'm safe, I belong, and I matter. So let me stop there, and I'll open it up for questions.

Operator

Conference Operator

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1. Please record your first and last name as well as your immediate affiliation when prompted. To withdraw your question, you may press star 2. Once again, at this time, if you would like to ask a question, please press star 1. And our first question is from Philip Cusick with JPMC. Your line is open.

Philip Cusick

Analyst at JPMC

Hey, guys, thanks. A couple, if I can. First, maybe you can dig into the tax issue in the InfoMart and if that impacted the America's COLO revenue. And then second, what are the incremental costs, Keith, of the green initiatives that we should expect from here? Thanks very much.

Keith Taylor

Chief Financial Officer

Philip, a very astute question that you asked vis-à-vis the tax implications. We've talked about two sort of questions. currency or tax matters in our prepared remarks this quarter. First and foremost, as it relates to the revenue side of the equation, because when we bought InfoMart, there was a, shall we say, a negotiation with the local taxing authorities on the value that gets ascribed to that building, and we came to a resolution in Q3. But prior to that, there was a very large assessment that basically was charged, of course, to the tenants of the InfoMart building. And so we absorbed at the cost and the tenants absorbed, if you will, the pass-through of some of those costs. In Q3, once we settled the arrangement with the tax authorities, there was a meaningful step down in the amount of taxes that we collectively were going to pay. And as a result, for those tenants that were part of InfoMart, they effectively are going to get a reduction of their taxes, and that affects us directly on our recoveries, if you will, the revenues attached to that. But bottom line is you've got to step back and say, okay, the revenue has come down, but economically this was good for not only our tenants, but it was even better for Equinix because we're, one, a large tenant in the facility, and we also absorb a lot of the unused capacity, if you will, in that space, and that tax gets burdened onto us. So that was the first one. The second matter I just want to raise because I think it's important just to make sure That was a property tax issue, and it all is attached to recoveries. The second issue for us vis-à-vis tax is income tax attached to very favorable hedge gains that we had on our hedges. And as a result, our income tax provision went up in Q3 because of how weak both the sterling and euro were relative to the U.S. dollar. As you know, a lot of that is reversed already in Q4. But we had to book the provision in Q3, and that's why you see the effect of that in the bridge. And then to go back then to your last question, really, which was on the green initiatives, suffice it to say, you know, Charles has made comments, as did I. We're very, very, very focused on ESG as a corporation and our green initiatives. And those green initiatives, of course, come in many different shapes and sizes, if you will. from how we procure our power to offsets to variable indirect power purchase arrangements. But, you know, there is a – I would tell you somewhere right now we spend somewhere between $10 and $20 million that we absorb to become 100%, you know, sort of, if you will, green-oriented and 100% focused on on driving our power consumption through green initiatives. And so we're highly focused on that. It is a $10 to $20 million cost to the business, but we recognize that it's important to not only the constituents in the company, but certainly to our communities and very important to our customers, given that we're in their supply chain.

Charles Myers

CEO and President

But important to note, Phil, that basically we've been doing that for a while, and so that's been kind of already baked into our operating results, and it's fully accommodated in our guide. Yeah.

Philip Cusick

Analyst at JPMC

Okay. I heard on the call, I thought I heard something that it was incremental cost to be observed there, but it sounds like that's mostly done.

Charles Myers

CEO and President

Yep.

Philip Cusick

Analyst at JPMC

Okay. And then on the, just follow up on the InfoMart side, can you give us an idea of the net impact on revenue from that, or maybe what the sort of underlying trend of the business would have been without that?

Keith Taylor

Chief Financial Officer

Yeah, so basically it would have taken us to the top end of our guidance range on an FX neutral and normalized basis. So So basically it was $4 million. Good.

Philip Cusick

Analyst at JPMC

Thanks, guys.

Operator

Conference Operator

Our next question is from Simon Flannery with Morgan Stanley. Your line is open.

Simon Flannery

Analyst at Morgan Stanley

Thank you very much. Good afternoon. So we obviously had a large acquisition and merger in the industry last night. I was just wondering what your thoughts would be on how that might change the industry dynamics. Do you have any? any perspective on what the European market might look like after that? And where does Equinix stand today in terms of looking at additional either acquisitions or on the JVs? You've talked about doing those. Is that anything we'll see in the near term? Thank you.

Charles Myers

CEO and President

Sure. Yeah, we fully expected that question would surface, Simon. Obviously, a big transaction in our industry for sure. So I'll start with this. We've got tremendous respect for both of those companies, It's not too difficult, I think, to see why each of those parties might be interested in this combination. Interaction has always been a vigorous competitor of ours in Europe, and I'm sure they'll remain as such. As for DLR, as I've said in many a public forum, it's my experience that the Venn overlap between our business and DLR's business is actually fairly small. That will probably not be the case with our X-scale joint venture, where we're likely to be more consistently head-to-head, but In our core retail business, we only see them sort of selectively as a competitor. Just to put it into context, according to Synergy Research, DLR's entire retail business outside of Europe and others, what we would be appending from a retail perspective onto the interaction business, that entire retail business outside of Europe is about a tenth the size of Equinix overall. So in reality, I think the combination represents the bringing together of two very different businesses, a strong European retailer and a strong global wholesaler. So I think there's probably merit in the deal and an industrial logic to it. I think it's a bit of a stretch to say that the combination really meaningfully closes the gap in terms of trying to replicate the scope, scale, and value of platform Equinix. And I would say I think the challenges in combining those businesses just mechanically, let alone operationally, financially, and culturally, will certainly be non-trivial. And even if and when that's done successfully, I think what comes out the other end is a company we'll feel pretty comfortable competing against, certainly in Europe, which we've been doing, you know, obviously for years, and in particular on a global basis. So I think, you know, it's understandable, but I think we're going to continue to, you know, sell the strength of our value proposition globally and feel like we're going to have, you know, great success with our customers. From answering the second question in terms of our own M&A, you know, we've said that we're going to continue to be We continue to believe that's an appropriate tool. At the same time, we're going to be pretty disciplined about that, and we're not going to chase valuations if we think they don't make sense for the business. Obviously, we feel really good about the transaction we recently announced in Mexico to enter that market. I feel like it was really sized right and priced right and gives us a really nice entry strategy into a very important market for us. There's a few other markets that I think we would you know, entertain as M&A opportunities to enter. But, again, we're going to make sure that we do that on a disciplined basis. So we feel like it's an appropriate tool in the bag, but one that we're going to use with real discipline.

Simon Flannery

Analyst at Morgan Stanley

And on hyperscale JV timing for new markets?

Charles Myers

CEO and President

We haven't really – we're actively working on that. As we had said previously, we're engaged – in Japan actively. The exact timing on those, just given the complexity of the transactions, is hard to fully predict. But I think if you look out over the next couple of years, we would expect to add several more JVs to the mix in terms of being able to offer the X scale sort of portfolio in key markets around the world. Great. Thanks for the call.

Operator

Conference Operator

Our next question is from Jonathan Atkin with RBC. Your line is open.

Jonathan Atkin

Analyst at RBC

Thanks. So, Charles, in your prepared remarks, you talked about edge products, and it got me thinking about any sort of trends that you're seeing in your cabinet ads in the Americas and the mix shift between Tier 1 markets and slightly smaller markets. Are you noticing any changes as you sort of develop new capabilities, and could that maybe inform your appetite to enter into, say, minor league cities rather than just major league cities?

Charles Myers

CEO and President

Yeah, we're not seeing any significant shifts in trends. Obviously, our major metros continue to drive the lion's share of both cabinet ads and revenue growth. But we do see real health in our other markets. I would say that we're going to start by offering our edge services in probably the more logical major metros. But to the extent we see momentum, I do think those will represent an opportunity for us to deploy infrastructure and drive cabinet yields into those markets as well. And again, depending on, I think, how use cases evolve, whether or not we would need to continue to look at expanding that reach beyond our current footprint, I think is something we're actively looking at. We have a team that we refer to as the Evolving Edge team, and we're actively looking at how we would do that. But I would say right now the bulk of the use cases that we see are well met by the current footprint that we have. And so being able to deploy our edge services, whether that be Network Edge or some of the others we might contemplate, into our very expansive aggregated edge footprint today, we think meets most of the needs of the market and will just continue to adapt as use cases might dictate that.

Jonathan Atkin

Analyst at RBC

Okay. And then on Sol, just interested, are businesses going with you for the first time into that market, or are they already in market and then they're kind of using you for their expansion needs?

Charles Myers

CEO and President

It's more typically our existing customers wanting to extend their infrastructure into Seoul, although we do have a team on the ground that is sort of cultivating local business as well. We said that our bookings are ahead of plan thus far, and that's driven by the strength of a couple of key deals where some of our cloud and IT service customers were looking to expand their footprint into that market with a pretty significant deal that we landed in Seoul.

Jonathan Atkin

Analyst at RBC

And then lastly, just on churn, are there any differences you're seeing in what's driving it and any reason to think that you would gravitate towards the low end or the high end of your traditional range going forward?

Charles Myers

CEO and President

No, it depends more on, I think it's more timing issues in terms of shifts between quarters, but no substantive shifts. As I said, we've talked about the fact that we are continuing to work through the last bits of the churn tail in the Verizon assets And I think that we now feel like we're positioned to get back to growth, you know, in 2020 on those assets. But no meaningful shifts. You know, what we have seen is, you know, there's not a lot of, you know, our churn is driven mostly by frictional churn and to some degree by things like bankruptcies and those kind of things. We see the occasional shift in terms of moving selective workloads to the cloud, but that's typically churning a portion of an implementation rather than the whole thing because, again, what we're seeing is people are very much committed to sort of hybrid and multi-cloud, and so they're maintaining private infrastructure and then integrating that with cloud assets, public cloud assets. And so no meaningful shifts that we're seeing right now from a churn perspective. I will say over time, though, I would hope that we're going to be able to, you know, one of the things that you are seeing in our bookings mix is a very clear discipline around, you know, these sort of sweet spot deals, well interconnected. So you're seeing that show up in terms of, you know, the volume of transactions and and number of deals done, as well as levels of interconnection. And so those are really encouraging signals for me in terms of execution of the strategy. And over time, I actually think that will help us hopefully, you know, trend towards the lower end of our range in terms of churn. So that is – because as I've always said, the best defense against churn is getting the right deployments in to begin with. And so – As we look at that, I think some of maybe larger footprints that were more susceptible to longer-term churn are things that we're not going to be doing. We probably will be pushing those, particularly very large footprints, off into the X-scale sort of entity, which is more equipped to deal with those dynamics. And I do hope that will improve our churn position over time.

Operator

Conference Operator

Our next question is from Frank Louthen with Raymond James. Your line is open.

Frank Louthen

Analyst at Raymond James

Great. Thank you very much. Can you give us a little color on you mentioned the multi-partner win with the energy company. Were you the only data center company on that deal, and what was in particular anything special about that with that? And then I've got a follow-up.

Charles Myers

CEO and President

Yeah, we were, I believe, the only data center involved in that particular transaction. It was a data center consolidation activity and also sort of integrating into a hybrid cloud architecture. And so they were really utilizing... cloud exchange fabric as their mechanism to integrate both their network and their cloud connectivity with their private infrastructure. And so a really good multi-partner win and one we were really excited about in the quarter.

Frank Louthen

Analyst at Raymond James

Okay. And looking at America's growth, just curious what you might be able to do to maybe accelerate that going forward and, in particular, Maybe give us an update on the additional land that was around the InfoMart that you could expand and then where you are in Napa de Americas to be able to finish filling out that facility and how that might help improve the growth in Americas.

Charles Myers

CEO and President

Yep. You know, I think the Americas business continues to, you know, perform well, particularly in terms of mix of business. I think we are, you know, probably the biggest driver is going to be, you know, sort of, getting us through the last of the churn activity that's been sort of above prior levels, which is creating a drag in terms of what was essentially a $500 million business, which has not had any growth, and that impacts the overall America's growth rate. And so I think as that subsides, I think we'll start to see some growth there. I do think we have opportunities to add in some of our key markets. We've already added capacity, which we're filling at a nice rate in Napa de Americas. The Dallas campus expansion is underway. Over time, we'll probably add both large footprint capability there as well as increasing retail. So that will probably be an opportunity for us to get some additional growth from that market. But I think the bigger things that I'm excited about longer term is us continuing to One, continuing to drive additional quota-bearing headcount into the market to capture the significant enterprise opportunity we see. Our gross bookings engine is performing very well in the Americas, and not only in terms of landing bookings in the Americas assets, but also delivering those globally across the platform. And so I think being able to continue to expand both our channel as well as our direct selling efforts in the region is And then over time, as we add new services, I think we're also going to be able to continue to, you know, enhance cabinet yields. But that's going to take some time for those new edge services to really mature.

Operator

Conference Operator

Our next question is from Kobe Sanasol with Cowan & Company. Your line is open.

Kobe Sanasol

Analyst at Cowan & Company

Great. Thank you. Maybe just following up on the growth, stabilized growth, I think, was 3%, you said, in the quarter, and I thought at least a few quarters ago there was talk about getting that number back up to 5%. Just curious what you think the longer-term growth rate for stabilized growth should be and what are the parts that potentially get us a bit higher. Maybe it's just the improvement in the Verizon assets that you mentioned. And then secondly, I think in your previous guidance from last quarter, you had assumed that the JV, the GIC JV would close in I think it was August and then closing in October. Curious what the benefit to guidance is in terms of the update you just made for 2019 as a result of that delayed close. Thank you.

Charles Myers

CEO and President

Let me take the first one, and I'll ask Keith to address the timing of the GIC transaction. Relative to stabilized asset growth, yeah, you know, we've been kind of hovering around that 3% to 4%, Mark Colby. and I think the catalysts for getting back into that 5% kind of range would be, one, as you noted and as I noted in the commentary, getting the Verizon assets sort of through the knothole. I do also think that 10 to 100 gig migrations have impacted those to some degree. We did see a good quarter in that. We actually saw a reduction in in interconnection churn. I don't think we're all the way through that, though, so I think it's going to sort of continue to go in waves, although the biggest players who I think have, you know, who were going to make that change have largely made it in the Americas, but there probably will be some more of that that I think will create some downdraft on the stabilized assets. growth. And we talked about, you know, there also being a few assets that we were actively migrating, you know, sort of business out of and those kind of impacted as well. So there's a variety of factors. I'm encouraged by what we can do both with our network edge offer as well as with what we see on the horizon in terms of some of the additional edge services because we can deploy infrastructure, shared infrastructure into some of those kind of facilities and get, you know, kind of meaningful returns on that and maybe drive some additional growth in cabinet yields into those. But I think that's going to be a longer-term proposition, and we'll probably really stay in that 3-4% range for a bit.

Keith Taylor

Chief Financial Officer

And, Colby, as I relate to the second question, for Q3, there's really no meaningful movement, as you know, for the Q3 quarter. And when we offered our prior guidance, it was really more about the influence that was going to take place in Q4. And just to remind you and everybody else on how this is going to get accounted for, recognizing that there is fee income that will come with the joint ventures. And as we continue to scale them up, there's fees that get attached to it. The fees come in through the top line through revenue. The equity ownership, the 20% ownership effectively comes through below the line, it will be an AFFO, but below EBITDA in the form of income from affiliated entities. And so that's how it sort of will present itself in our financials. Suffice it to say, this quarter for Q4 and our guidance and implications on Q3 was negligible. Think about $2 million on either side. And the reason for that is it's all about timing. It's the timing of the costs, timing of the fees, timing of the income stream associated with how those customers are installed in the environment in those two assets that we have and as we continue to scale them. Overall, what we'll try and do is continue to keep everybody fully abreast of not only this JV, but the ongoing JVs on what, if you will, the fund flow is. But for this year, as we said, there's really never going to be any meaningful impact to our financial results, and for all intents and purposes, it's just been absorbed into the ongoing.

Kobe Sanasol

Analyst at Cowan & Company

Okay, thank you.

Operator

Conference Operator

Our next question is from Michael Rollins with Citi. Your line is open.

Michael Rollins

Analyst at Citi

Hi, thanks. Two questions. First, just curious how you're looking at the opportunities to recycle capital for maybe some of the existing assets, whether it's to markets that you may not think of as core to the portfolio or situations where there might be just opportunities to take advantage of the private markets. And then the second question is just with the ATM program, is there a framework or allocation strategy that investors should think about in terms of the timing or ways you may access that program in the future? Thanks.

Keith Taylor

Chief Financial Officer

Charles and I are looking at each other. Who wants to answer that? I think on the first one, I'll just touch base on that first and foremost. Overall, as you hear us continually say and talk about, we really refer to Equinix as a platform. Periodically, there are assets that would be disposed of, not so much because we're trying to recycle capital, but it's more because when you look at the strategic value of that asset relative to what we're doing with our platform and where we want to invest our dollars, We choose occasionally to turn down a site like we've recently done or sell a small asset when it came with an acquisition, and we did that with Switch and Data. We just recently sold one of Verizon's small assets. We referred to it as our New York 12. We sold our Istanbul one asset, which was part of Telecity. But it's not really about recycling. It's more about making sure we create the momentum and the right assets for ourselves. And again, I think it's really important, Michael, for you and for all the listeners on the call today. You know, we sell across this platform. Every asset is highly important to us. And so that's why we're not probably as traditional as some of the others in thinking about recycling because it is the platform. As we get then into the discussion around ATM, ATM, I think it ties into a much more broader discussion on how we will fund ourselves on a go-forward basis. If we all go back to the June 2018 Analyst Day, we talked about how we could grow the business over the five-year period in 18 through 22 and what that would mean from capital dollars spent and, if you will, the scale of the dividend and the like. As a result, we knew at that point in time that there was going to be funding in the business, funding needed for the business, and it was going to come in the form of both debt and equity. And so what I would tell you is that there's no perfect way to describe how we use the ATM other than what we're trying to do is take advantage of it when it makes sense for the shareholder and stay away from it when it doesn't make sense for the shareholder. And a perfect example would be in December of last year when we were at a 52-week low, we were not in the ATM program. When we're reaching some of our all-time highs, we occasionally pull down a little bit of equity to fund the business because we know that between now and 2022, there is still some capital that we'll need to fund all that we have in front of us, including some of the M&A activities. And I've said on the last call, you're going to see us do more and more of debt, because one, I think the cost of debt is going down, but two, we've brought some real balance into our capital structure. We've got our investment grade rating, and we're at a point where we're well within our targeted leverage range. So it's a long-winded way of saying that we're going to moderate, we'll do it wisely. It is a cheaper way to go to the equity markets than doing a follow-on offering. Think about 50 basis points versus something ranging from one to one and a half basis points to do those transactions. And we do it at our discretion based on market conditions and targets. And so bottom line is we'll continue to monitor it. Right now we have roughly $300 million left on the program that we approved last December. We've got a lot of cash on our balance sheet, $1.4 billion, as I said, at the end of Q3. And then you heard me also say with the October closing of the JV, that brought in another $355 million. So we're going to be really prudent about how we refinance our debt, how we raise new debt, and how we use our ATM and a go-forward basis to make sure we maximize the return for our investors. Charles, anything else you want to add? Okay. Michael, anything else? Thank you.

Operator

Conference Operator

Our next question is from Jordan Sadler with KeyBank Capital and Markets. Your line is open.

Jordan Sadler