Equinix, Inc.

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 and Sustainability. 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 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 21, 2020, and 10-Q, filed on July 31, 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 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 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 in the 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 third quarter earnings call. This year has been an exceptionally challenging one as we all continue to navigate the economic, health, and societal changes happening in our world. Despite these challenges, we find Equinix in a unique position to help our customers adapt, respond, and accelerate digital transformation, a key priority for business across every sector and a critical driver for economic recovery. With over 10,000 customers, cultivating and curating ecosystems that enable digital business remains central to our strategy and has been accelerated by COVID as businesses shift to operating, selling, and expanding online. As we respond to these shifts, we remain focused on driving discipline growth, extending our global leadership, and effectively scaling our business. We are augmenting our capabilities and enhancing our service portfolio in targeted ways to expand our addressable market, responding to evolving customer requirements, and ensuring that we remain well positioned for the future. We continue to complement and extend our global platform both organically and through acquisitions, enhancing cloud and network density, and offering our customers the richest range of options to support their adoption of hybrid and multi-cloud as the architecture of choice. Platform Equinix allows our customers to more effectively distribute infrastructure, putting connectivity, data, security, and applications where they need them, and interconnecting them easily to the cloud, delivering the performance required to service increasingly global digital businesses. In October, we closed the acquisition of Bell Canada's data center portfolio, positioning Equinix as a leading national provider in Canada while giving Canadian customers the global reach they need. We also announced our long-awaited entry into India, one of the world's largest economies and fastest-growing data center markets, and now the 27th country served by platform Equinix. Once completed, our GPX acquisition will add two highly interconnected data centers in Mumbai and will serve as a critical foundation for pan-Indian expansion. Our global reach remains as important as ever, combining unparalleled facilities-based coverage with integrated systems, delivery, and care. This competitive differentiation continues to drive our business, with revenues from multi-region customers increasing 1% quarter-over-quarter to 74%, and revenues from customers across all three regions remaining at a healthy 62%. The Americas continues to lead in exporting business to our other regions, as network, cloud, financial, and manufacturing customers take advantage of our reach. We continue to deepen our penetration of the Fortune 500 and Global 2000, and the consistent growth of our top accounts demonstrates the depth of our addressable market and the stability of our business despite the pandemic, with over 90% of our top 50 accounts increasing their business with Equinix quarter over quarter. As we grow the business, we are also investing in our future, by making Equinix a place that attracts and inspires diverse talent and making sure that our mission reflects our responsibility to leave our world better than we found it. Equinix was recently recognized as one of the top companies for diverse talent and received the 2020 Green Power Partner Award from the US EPA, recognizing our contribution to helping advance the development of the nation's green power market. In September, we issued our first green bond offering as a mechanism to further invest in innovative designs and technologies. meaningfully increasing our efficiency and resource consumption to ensure we continue to operate sustainably and advancing our commitment to reach 100% clean and renewable energy across our portfolio. Turning to the quarter, in Q3, we continued to adapt our selling engine, tapping into a healthy demand environment to deliver another strong bookings performance. These results were driven by continued strength in channel bookings, solid interconnection growth, and firm pricing. and the quality and quantity of our pipeline looks strong as we close out the year. We continue to instrument and automate our business to support high deal volumes, closing over 4,400 deals in the quarter across more than 3,100 customers, with a significant quantity of these orders serviced through digital interfaces, giving our business superior predictability and creating a huge opportunity to drive attach rates for interconnection and other incremental services. Turning to our results as depicted on slide three, revenues for the third quarter were 1.52 billion, up 9% year-over-year. Adjusted EBITDA was up 11% year-over-year, and AFFO was again meaningfully ahead of our expectations. Interconnection revenues were 15% year-over-year as both unit volume and pricing continued to trend favorably. These growth rates are all on a normalized and constant currency basis. We now have over 386,000 interconnections. with 14 of our top metros having ecosystems with over 10,000 interconnections and growing. In Q3, we added an incremental 8,500 interconnects, more than the next 15 competitors combined, driven by work from home, video streaming, and enterprise cloud connectivity. Internet exchange saw peak traffic up 43% year-over-year, with a 7% quarter-to-quarter step-up, albeit returning to a more normal revenue growth rate after the surge of capacity buying in the previous quarter. Equinix Fabric also had a great quarter, eclipsing the $100 million in annualized run rate with over 2,300 customers, fueled by broad-based adoption across all verticals and geographies. As cloud adoption continues to accelerate, we are also making great progress extending our leadership in the cloud ecosystem, capturing new cloud on-ramps and continuing to expand our X-scale business. We're seeing strong demand for our assets in our initial European JV, and are on track to close our new JV in Japan with GIC in Q4, adding locations in Osaka and Tokyo. We've already signed our first X scale deal in Japan, securing a key anchor tenant who will take the full phase one capacity of Tokyo 12. And in Q3, we toppled the final domino to give Equinix direct cloud on ramps for all five of the top clouds across 11 of the metro's most critical for global infrastructure deployments, Silicon Valley, DC, Chicago, Sao Paulo, Amsterdam, London, Frankfurt, Hong Kong, Singapore, Sydney, and Tokyo. Nine more global markets than any other provider. We continue to adapt platform Equinix to the evolving needs of our customers. And despite the significant challenges of integrating a new team during COVID, we effectively merged our packet and Equinix roadmaps and launched our integrated Equinix metal offering in four global metros with plans for an additional 10 by early 2021. Equinix Metal is a feature-rich and fully automated bare metal service, giving our customers the option to deploy the physical infrastructure of their choice at software speed across our platform, enabling digital leaders to place infrastructure where they need it, when they need it. Equinix Metal is also directly integrated into Equinix Fabric, helping enterprises quickly interconnect to thousands of networks, enterprises, and clouds on platform Equinix, advancing our vision to make Equinix the world's digital infrastructure company. Now let me cover highlights from our verticals. Our network vertical continues to be a foundation of the platform, achieving its second best bookings, driven by carriers expanding capacity for digital business. New wins with local telcos included Airtek Internet, a Latin American fiber internet provider deploying a network hub to improve peering and performance, and Mint Telecommunications, a British regional network provider deploying infrastructure for increased performance, security, and scale. Our financial services vertical had a solid quarter, led by EMEA and the insurance sub-segment. New wins included a Fortune 500 commercial bank, simplifying their digital ecosystem, as well as expansion with BitFX, a subsidiary of Singapore Exchange Group, adding new qualifications for its FX trading solutions. Our content and digital media vertical saw particular strength in markets catalyzed by the shift to virtual, including video, social media, and gaming. New wins included Rakuten Mobile, selecting Equinix as the foundation to deliver its communication platform to global operators and enterprise customers, as well as an online real estate brokerage interconnecting to enrich digital experiences for our customers. Our cloud and IT vertical continue to over-index significantly with strength in the Americas and in infrastructure and software sub-segments as adoption of hybrid cloud continues to accelerate. We remain focused on enhancing our market-leading cloud density, adding eight cloud on-ramps this quarter alone, bringing us to 160 direct cloud-on ramps at Equinix, or 42% market share in our metros. Our enterprise vertical had another great quarter with particular strength in healthcare and manufacturing. New enterprise wins included healthcare companies Maxor Pharmacy Services, Sandata Technologies, as well as Garden Health, a leading precision oncology company. Our channel program continues to deliver great results, accounting for over 30% of bookings and generating over 60% of all new logos. We had great wins with reseller and alliance partners including Cisco, Microsoft, Oracle, WWT, and Zenlayer across a wide range of industry segments. Channel partners are also contributing to the success of our new market expansions. We're excited to expand our relationship with Bell Canada as a strategic partner, working to deliver industry-leading joint efforts, joint offers in Canada and globally. This partnership also allows Equinix to engage with Bell resale partners to build stronger relationships across the Canadian channel ecosystem. Other notable wins this quarter included Alestra in our recently acquired Mexican assets for an upscale retail chain, and Capgemini in Sao Paulo for a Fortune 100 pharma firm, both transitioning from on-premise data centers to hybrid multi-cloud solutions for elasticity and scale. Now let me turn the call over to Keith to cover the results for the quarter.