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 up for questions. Also, today's conference is being recorded. If anyone has any objections, please disconnect at this time. I'd now like to turn over the call to Katrina Rymel, Vice President of Investor Relations. You may begin.

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 identified 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 21, 2020, and 10-Q, filed on May 7, 2020. 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 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 Web site a presentation designed to accompany this discussion along with certain supplemental financial information and other data. We'd also like to remind you that we post important information about Equinix on our IR page from time to time and encourage you to check our Web site 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 we all continue to navigate various health, economic, and social changes occurring in our world, our key priorities remain clear, focusing on the health, safety, and well-being of our colleagues, customers, and communities, and enabling our customers to respond effectively to the increased urgency of digital transformation as a critical business priority and a driving force in the global economy. Even in the face of an uncertain macro environment created by the global pandemic, the Equinix business continues to perform well. and our relevance in enabling digital business and connectivity remains a core tenet of customer purchasing decisions. In Q2, we delivered the third best gross bookings in our history, driven by a record quarter in the Americas, continued strength in channel bookings, robust interconnection performance, and a high volume of small deals. Our expanding go-to-market engine continues to fuel the business, generating over 4,200 deals in the quarter across more than 3,000 customers. And the importance of our global reach continues to shine as our customers scale and expand across the globe, leveraging our platform across 56 metros in 26 countries. We're continuing to increase the scope of customer deployments, and customers operating in all three regions now represent 62% of revenue, up 1% quarter over quarter. Our organic expansions continue, opening Hamburg this quarter and adding Bordeaux as a strategic subsea landing location in support of a key hyperscaler. and we're using disciplined M&A as a tool to enter new markets and scale our platform. On June 1st, we announced our intent to acquire 13 Bell Canada data centers, expanding our coverage in Canada to a national platform and unlocking opportunities for global corporations to capture growth and innovation in the Canadian market. This acquisition, which is expected to be immediately accretive upon close in Q4, reflects Equinix's continued commitment to executing platform-enhancing acquisitions on financially attractive terms. Before we get into the detailed core of the results, I want to share a few thoughts on our commitment to social change and our continued work to build a culture and community that can have a meaningful, sustainable impact on the future of our society. Recent events in the US have triggered outrage and an outpouring of emotions around the world. We have actively tapped into this energy, fostering a rich and inclusive dialogue on the topics of equity and social justice, with a focus on improving our collective understanding of each other and creating a commitment to action which is imperative to moving us forward positively as individuals, as a company, and as a society. While still early in our journey, our vision remains clear. For Equinix to be a culture where every employee, every day, can truly say, I'm safe, I belong, and I matter. And for our workforce at all levels to better reflect and represent the communities in which we operate. We acknowledge that we have work to do in achieving this vision, but are fully committed to demonstrating measurable, enduring progress against a multi-year strategy and continue to believe that our culture remains a key competitive differentiator. Our approach includes traditional aspects such as diversity targets, bias training and mitigation, community philanthropy programs, and employee mobilization. But we also believe that lasting change will only happen by pushing ourselves even further in our pursuit of becoming a truly equitable and global organization. Our objective is to continue to make our culture a critical competitive advantage, seeking to engage every leader and every employee at Equinix. and integrating diversity, inclusion, and belonging into every aspect of how we run the business. As a company, we will continue to put in the work and reaffirm our commitment to cultivating a workplace and a society that embraces and vigorously defends equality and diversity. Now, turning to our results as depicted on slide three, revenues for the second quarter were $1.47 billion, up 8% year over year. Adjusted EBITDA was up 9% year-over-year, and AFFO was again meaningfully ahead of our expectations. Interconnection revenues continued to over-index substantially, growing 16% year-over-year, reflecting the important role of interconnection in digital transformation and highlighting our clear market leadership in this area. Unit volume was fueled by growth in provision capacity to support increased traffic and solid new product performance, reflecting our ability to meet the evolving connectivity requirements of hybrid and multi-cloud architectures. These growth rates are all on a normalized and constant currency basis. We now have over 378,000 interconnections, and we continue to see healthy expansion of our dynamic ecosystems across the globe. In Q2, we added an incremental 8,000 interconnects driven by streaming, video conferencing, enterprise cloud connectivity, and investments in local aggregation to support work from home. Internet Exchange had one of its best quarters ever, with peak traffic up 44% year over year, as the peering community augmented capacity for video conferencing, gaming, and over-the-top video, replacing headroom that had been exhausted by COVID-related traffic growth. ECX Fabric also had a great quarter, eclipsing 2,200 participants and demonstrating robust multi-cloud adoption, particularly from network providers, with one-third of them scaling bandwidth to five or more clouds. We're also making good progress in integrating the packet business with strong new logo engagement and continued go-to-market integration as we work to deliver on our vision for platform Equinix to underpin the foundational infrastructure for today's digital leaders. We're also strengthening Equinix's leadership position in the cloud ecosystem through expansion of our hyperscale strategy, allowing us to service both retail and large footprint in key markets while maximizing the efficiency of our balance sheet through our partnership with GIC, We're seeing strong customer demand in our initial X-scale JV in Europe and will soon expand this JV to include our seventh asset, Paris 9. This facility is slated to open early next year and is immediately proximate to our market-leading Paris campus and is already 100% pre-leased to a major hyperscaler. We're also tracking to close our new X-scale JV in Japan with GIC in Q4, adding new locations in Osaka and Tokyo. Now let me cover highlights from our verticals. Our network vertical achieved record bookings driven by robust reseller activity and network expansion to support traffic growth. Expansions included Colt, a global telecom provider, adding capacity at the interconnected edge to support increasing user demand, as well as Vocus Communications, an Australian specialty fiber and network solution provider, deploying infrastructure to increase scale and improve end-user experience. Our financial services vertical had second-highest bookings with strength in global financial and insurance firms as they accelerate digital transformation. New wins and expansions included a leading Nordic insurance company leveraging hybrid multi-cloud and distributed data, and Galileo Financial Technologies, a payment solutions platform re-architecting their network and securely connecting to ecosystem partners. Our content and digital media vertical also saw solid bookings with particular strength in gaming and video, driven by the spike in demand for indoor entertainment. New wins and expansions included IOTA, a leading audience technology platform looking to expand their footprint to serve the ad tech industry, and Moody's, leveraging ECX Fabric to re-architect their network and multi-cloud access for increased performance. Our cloud and IT vertical also showed strong bookings, led by the infrastructure and software sub-segments with continued momentum in cloud adoption. We continue to extend our market-leading cloud density, adding 10 cloud on-ramps this quarter alone. as cloud providers expand services into new metros, including Bogota and Mexico City. New wins and expansions included Cisco, extending service capabilities to additional regions to support new product offerings and security and client demand for Cisco WebEx communication solutions, and BMC Software, a leading platform provider of digital workflow solutions, deploying infrastructure to support their expanding customer base across the region. Our enterprise vertical saw solid bookings and broad-based demand with particular growth in business and professional services, government, and energy, despite some COVID-related friction. COVID continues to shift enterprise spending patterns, resulting in increased demand for various cloud-based services, including telephony, messaging, and conferencing. New enterprise wins included a Swedish engineering company optimizing its global network to provide optimal employee experience. A global spirits distributor to switch from building its own on-premise data centers to Equinix to support rapid deployment, as well as Fung Group, a global leader in supply chain solutions, leveraging ECX Fabric to digitize its supply chain ecosystem. Our channel program had a record quarter, accounting for over 30% of bookings and delivering great productivity from this go-to-market vector. The channel program continues to be a new logo engine for the company, generating over 60% of all new logos. We had great wins with reseller and alliance partners, including Orange Business, Cisco, AT&T, Microsoft, and Dell, across a wide range of industry segments, with projects focused on both digital transformation and COVID-19 response. New channel business this quarter included notable wins with AT&T for a global insurer transitioning from on-premise data centers to a hybrid multi-cloud solution to enhance elasticity and performance, and with Vodafone for a premier global energy company supporting their adoption of SD-WAN, and hybrid multi-cloud enablement. Now, let me turn the call over to Keith to cover the results for the quarter.