Equinix, Inc.

And welcome to the Equinix first 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 any 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're 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 19, 2021. 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-gap measures on today's conference call. We provide a reconciliation of these measures to the most directly comparable gap 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'd 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 fallen questions to just one. At this time, I'll turn the call over to Charles.

Thank you, Katrina. Good afternoon, and welcome to our first quarter earnings call. We had a great start to the year, delivering one of the strongest netbookings quarters in our history, fueled by strong demand across our platform, our lowest churn quarter in many years, and continued momentum in our America's business. With the addition of the Bell Canada assets, we are now the market leader in 19 of the 26 countries in which we operate. And we are delighted to now be the market leader in retail co-location across all three regions of the world, taking the number one spot in Asia Pacific for the first time this quarter. Our bookings performance continues to highlight the consistency and scale of our go-to-market engine, executing 4,300 deals with more than 3,200 customers. We have a robust build pipeline to support this demand, including 36 major projects underway across 28 markets in 19 countries, one of our most active build years ever. We fully recognize that COVID remains a very acute issue with continued tragic impacts in key markets around the world, including India and Brazil. Our hearts go out to our colleagues and customers in those markets, and we are actively taking steps to support those communities. But as we navigate toward a post-pandemic world, we believe Equinix remains uniquely well-positioned. Digital transformation continues to accelerate, and businesses across a broad range of verticals are recognizing that their infrastructure can be a key source of competitive advantage in an increasingly digital world. Demand is as strong as ever, with global IT spend expected to rebound above pre-pandemic levels as enterprises increase hybrid cloud spending and service providers build out their delivery platforms to tap into this demand. Against this backdrop, we remain focused on the clear set of priorities I outlined at the start of the year, investing in our people and culture, simplifying and scaling our business, accelerating our digital services, and expanding our global reach, both through our retail footprint and our rapidly growing X-scale business. While we're delighted with our business results, we are also highly attuned to our responsibilities as a market leader and continue to advance a bold sustainability agenda across all dimensions of ESG. Supporting our people and strengthening our culture continue to be foundational to our strategy. And in a time where it matters more than ever, our vision remains clear. For Equinix to be a place where every employee every day can confidently 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. In early April, we hosted our second annual Days of Understanding, where thousands of our employees around the world attended workshops to listen, learn, and promote a culture of mutual understanding and inclusion as we continue to build and foster an engaged, diverse workforce. Our people show up every day inspired by our purpose, to be the platform where the world comes together, enabling the innovations that enrich our work, life, and planet. As we pursue this purpose, we are also deeply committed to our role as an important component in greening digital infrastructure. We recently published our 2020 corporate sustainability highlights, and I am proud that Equinix once again achieved more than 90% renewable energy coverage for our global data center footprint and received an A-minus score for our CDP climate change survey, a leading environmental rating system focused on climate-related transparency and action. In January, we announced alongside other providers the formation of the European Climate Neutral Data Center Pact, committed to ensuring data centers in Europe are carbon neutral by 2030. We continue to invest significant resources in our ESG leadership, and we'll roll out additional global ambitions over the coming quarters in both our environmental and social initiatives. Now, turning to our results, as depicted on slide three, revenues for Q1 were $1.6 billion, up 7% year over year. Adjusted EBITDA was up 10% year over year, and AFFO was meaningfully ahead of our expectations. These growth rates are all on a normalized and constant currency basis. Our leading interconnection franchise continues to perform well, with revenues substantially outpacing co-location, growing 13% year-over-year, driven by the continued strength of Equinix Fabric. We now have over 398,000 interconnections and added more organic interconnections year-over-year than the next 10 competitors combined. In Q1, we added an incremental 6,700 interconnections fueled by hyperscaler build-outs and strong enterprise demand, offset by a slight seasonal increase in network grooming activity. Internet Exchange saw peak traffic up 9% quarter-over-quarter and 28% year-over-year, driven by the cloud and network segments. Equinix Fabric also saw strong growth driven by expanded use of our inter-metro offering and continued diversification of end destinations. More than 2,500 customers are now on Fabric, and we remain focused on driving higher attach rates for this product across our platform. We're also seeing strong customer interest in our Equinix Metal offering, and continue to deliver on our commitment to expand the availability and feature set of this offering, enabling as-a-service consumption of our value proposition across 18 global metros. On the X-scale side of our business, we're accelerating our pace and continue to make meaningful progress on our ambitious plans for 2021, as rapid growth of the digital economy drives increased demand for global cloud connectivity. With our X-scale facilities, hyperscale companies can add large footprint core deployments to their existing network and on-ramp footprints at Equinix, enabling faster time to market and offering direct interconnection to a vibrant ecosystem with their customers and strategic partners. Our more than $3 billion program, financed with the support of our JV partners, will develop over 290 megawatts across our first two JVs, with several more already in the works. We are broadening our reach with the first building of our Dublin 5 campus, which is JV-ready and already 100% pre-leased to a major hyperscaler. Additionally, after quarter end, we pre-leased our entire London 11 asset. These two deals alone represent nearly 40 megawatts of capacity fully committed in advance of delivery. Now let me cover highlights from our verticals. Please note that we updated our customer segmentation approach to better reflect industry classifications and use cases, as well as combined our financial services and enterprise segments to reflect the true scale and momentum of the enterprise opportunity. Going forward, we'll report under these four key verticals. Our network vertical saw strong bookings led by the previously mentioned strength in the Americas as firms expand their capabilities and capacity for digital business and momentum begins to build for industrial 5G applications. A meaningful part of our network vertical is resale, an indication of the momentum of our channel efforts as we work with partners to deliver more complete solutions to support enterprise digital transformations. Expansions this quarter include British Telecom, a leading telecommunications provider, optimizing network and connecting to multi-cloud for their global enterprise and customers. And Alestra, one of the first Mexican cloud service providers, leveraging Equinix Fabric to provide a multi-cloud product offering. And Subco, a leading subsea cable system development firm, deploying a cable node to establish the first route between Oman and Australia. Content and digital media achieved solid bookings as indoor entertainment continues to drive activity in the social media, gaming, and streaming platforms. Expansions included marquee wins like Roblox expanding across platform electronics to support their rapidly growing user base and big data requirements, as well as a global edge cloud provider expanding capacity and deploying network nodes to support accelerating demand for video content. Our cloud and IT vertical delivered strong bookings led by hyperscalers continuing their global growth. And it's worth noting that these bookings results do not include the previously referenced X-scale wins, which are additive to this strong retail performance. Q1 was also an exceptional quarter in terms of cloud on-ramp additions, with 21 new on-ramp wins in the quarter, roughly equivalent to our cumulative volume over the prior four quarters and representing a 75% share of on-ramps launched in our metros. As a result, Equinix customers can now enjoy low-latency access to multiple clouds in 31 metros across the globe, including eight of the world's top 10 metros by GDP. Expansions this quarter included a Fortune 30 software provider deploying infrastructure to support digital transformation and IT initiatives, and Everest, an Australian cloud services provider specializing in healthcare, expanding to meet country-specific data compliance requirements and improve user experience. Our enterprise vertical continued to be a major contributor to overall booking performance, driven by strength in the retail and financial services subsegments as enterprises shift from pandemic initiatives, such as work from home and collaboration, to a broader focus on digital transformation. Expansions included CME Group, a top global financial derivatives exchange, expanding their footprint to support growing demand of matching engines, resulting from a new platform launch. as well as a leading global airline re-architecting to connect to their preferred network and cloud partners and tap into our growing transportation ecosystem. And our channel program continues to deliver exceptional results, contributing more than 30% of our bookings and accounting for over 60% of our new logos. We had great wins with resellers and our alliance partners, including AT&T, Dell, and IBM, across a wide range of industry segments focused on digital transformation efforts and COVID-19 response. Partner wins included working with Verizon, utilizing their network-as-a-service strategy to help a large U.S. healthcare provider modernize their mission-critical contact center and leverage a new cloud architecture supporting 12 million members across the U.S., as well as a win with a global Canadian manufacturer deploying in Canada and Germany for WAN optimization and cloud access, utilizing Cisco's SD-WAN solution interconnected to Equinix Fabric. Now let me turn the call over to Keith and cover the results for the quarter.