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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 would now like to turn the conference over to Katrina Reimel, Vice President of Investor Relations and Sustainability. You may begin.
Katrina Reimel
Good afternoon and welcome to today's conference call. Before we get started, I'd like to remind everyone that some of the statements that 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, and 10-Q, filed on July 30, 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 regulations for disclosure, it is Equinix's policy not to comment on this 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, the most directly comparable GAAP measures, and a list of the reasons why the company uses these measures in today's press release of 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 self-signed 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.
Equinix
Thanks, Kat. Good afternoon, everybody, and welcome to our third quarter earnings call. We had a great quarter, achieving our 75th consecutive quarter of top-line revenue growth and a record Q3 on bookings, a clear signal of strong market demand. Our results were fueled by continued strength in our American business and robust performance for our channel program globally as key partners continue to see platform mechanics as a point of nexus for digital transformation solutions. The pandemic has triggered an accelerated need to digitize business models in virtually every segment of the economy, and our strong results reflect this increasing demand for digital infrastructure. And Equinix remains uniquely positioned to help customers as they shift towards distributed, hybrid, and multi-cloud as the clear architecture of choice. As we continue to strengthen our position as the world's digital infrastructure company, our focus remains on creating distinctive and durable value for our customers and our shareholders, driving growth and scale in our market-leading co-location franchise, expanding our relevance to the cloud ecosystem through Xscale, and tapping into massive sources of incremental demand by adapting to evolving customer needs with our rapidly growing digital services business. Turning to our results as depicted on slide three, revenues for Q3 were $1.7 billion, up 8% year over year. Adjusted EBITDA was up 4% year over year, and ASPO was in line with our expectations. Interconnection revenues continued to outpace co-location revenues, growing 11% year over year, driven by solid physical cross-connect growth and broad adoption of Equinix Fabric. These growth rates are all on a normalized and constant currency basis. We process more than 4,200 deals in the quarter across more than 3,100 customers, highlighting the reach, scale, and predictability of our bookings engine. We have a solid demand pipeline as we look to the final quarter of the year, and we continue to add capacity to service this demand with 11 major projects delivered this quarter in key markets like Frankfurt, New York, and Singapore, and 31 more major projects underway across 23 markets in 16 countries. Our global interconnection franchise continues to thrive with over 414,000 total interconnections on our industry-leading platform. In Q3, we added an incremental 7,800 interconnections and now have at least one major cloud on-ramp in 42 metros around the world, two times more than the nearest competitor, a clear indication that Equinix is in the home of the interconnected cloud. Internet Exchange saw peak traffic up 6% quarter-over-quarter and 30% year-over-year to over 21 terabits per second, as traffic growth remains robust. Equinix Fabric saw excellent growth, continuing to significantly over-index within the broader interconnection portfolio. More than 2,800 customers are now on Fabric, with attach rates moving up and to the right as businesses diversify their end destinations and service providers integrate Fabric into their own solutions. In September, we extended platform equinix into our 27th country with the close of our GPX acquisition, entering the strategic Indian market. Our two data centers in Mumbai form a network-dense campus with more than 350 international and local companies, including six on-ramps to the world's leading cloud service providers and a robust network ecosystem. GPX represents an ideal entry point into this top 10 GDP country, and we expect to expand our operations significantly in India over the coming years as we tap into this rapidly growing market. In parallel with our tremendous retail success, we continue to expand our X-scale business, In October, we announced plans to expand into Australia with an agreement to establish a $575 million joint venture with PGIM Real Estate to develop two data centers in Sydney, which will provide more than 55 megawatts of capacity when fully built. Also, during the quarter, we closed the first phase of our previously announced EMEA II joint venture with GIC and signed two megawatts with a hyperscaler in Franklin. We currently have eight X-scale builds under development, including our newly announced Madrid III Mexico City 3, and Sydney 9 assets, which will collectively add 25 megawatts of capacity when they open in the first half of 2022. The total investment of our various hyperscale joint ventures, when closed and fully built out, is now expected to be more than $7.5 billion across 34 facilities globally with more than 675 megawatts of power capacity. Turning to our digital infrastructure services, our Equinix metal business saw strong revenue growth as cloud native and service provider customers continue to embrace the ability to deploy physical infrastructure at software speed. And NetworkEdge saw robust growth as established customers purchased more virtual network functions across additional metros. By year end, we expect NetworkEdge to be available in 25 metros around the world. So now let me cover highlights from our vertical. our network vertical continues to be a foundation for the business, with strength in the quarter in cable and satellite subsegments and continued momentum in joint go-to-market with our top network partners across the globe. Expansions this quarter included Xeover, a global communications infrastructure company, adding interconnection and co-location capacity to support demand. Vocus, Australia's leading specialist fiber and network solutions provider, building infrastructure between both Sydney and Melbourne to offer network services. And Hurricane Electric, a global network service provider, utilizes Antiquities Fabric to allow enterprise customers to access their IP transit product at scale and in real time. Our enterprise vertical saw another strong quarter, led by manufacturing and fintech and record channel activity. New wins and expansions included a Fortune 100 manufacturing company deploying global network hubs to enable their SaaS analytics offerings. a leading technology manufacturer deploying a custom liquid-cooled environment and solution center to support the next generation of high-performance compute, and a Fortune 250 online retailer and e-commerce platform deploying cross-platform mechanics with low-latency, cloud-adjacent network hubs to support their retail-branded sites. Our cloud and IT verticals saw particular strength in the Americas as industry-specific cloud solutions continue to be a catalyst for innovation and new growth. Expansions this quarter included Adobe, a leading cloud software provider, deploying infrastructure to support its platforms and optimize sustainable participation in key digital markets and ecosystems. Wasabi, a U.S.-based object storage company, expanding their offering on Equinix Fabric into APAC and EMEA, enabling customers to easily connect their bare metal workloads hosted on Equinix Metal. And a top five global software provider, employing core nodes to support their growing user base and demand in both Mexico City and Sao Paulo. Content and digital media had a great book this quarter, with resurgence in this vertical being led by APAC and broad-based strength in the gaming and streaming subsegments as consumer demand for at-home digital services remained strong. Expansions this quarter included Netflix, a global streaming service expanding cross-platform equities to new and existing markets to support OTT delivery. Kingsoft, a Chinese cloud provider expanding into Singapore to support rapid sales growth, and a top three content distributor extending coverage and scale for its growing platform in the delivery of new and existing security solutions. And our channel program continues to shine, delivering another robust quarter. This important go-to-market notion accounted for over 35% of total bookings, nearly half of our enterprise bookings, and more than 60% of our new logos in the quarter. we are benefiting from tremendous momentum in hybrid cloud adoption and seeing particular strength in joint enterprise pursuit with our key alliance partners such as AT&T, AWS, Dell, HPE, and Microsoft. Wins were across a wide range of industry verticals and included a marquee win with NVIDIA, IBM, and SBA for Continental Group, a worldwide automotive parts supplier building an interconnected global network to optimize workloads and speed up AI training for their advanced driver assistance systems. So now let me turn the call over to Keith and cover the results for the quarter.
Equinix
Great. Thanks, Charles, and good afternoon to all. Well, let me start by saying the Equinix business continues to hum, and once again, we met our expectations for better. We had a very solid quarter. The macro environment for digital infrastructure continues to drive expanding market opportunities. as demonstrated by another outstanding bookings quarter, both at the gross and the net level from our industry-leading go-to-market engine. Our bookings backlog remains both significant and elevated as we work to install the substantial volume of business closed through the past few quarters. And our forward-looking pipeline is extremely healthy in all of our regions. Our channel sales activity was the best in our history, and our global platform delivered healthy inter- and inter-region activity. We had firm MRR for cabinet yields with yet again net positive pricing actions, a validation of a differentiated operating model compared to others in our space. On a year-to-date basis, our global design and construction and ops teams have delivered more than 18,000 cabinets of retail capacity. and 40 megawatts of X scale inventory, while also rolling out critical network infrastructure assets across our targeted markets in support of our fabric, network edge, and metal service offerings. We've seen no major delays to date in delivering new capacity despite general market concerns related to supply chain challenges, a reflection of the efforts put forth by our best-in-class procurement and strategic sourcing teams. Now let me cover the results for the quarter. 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 $1.675 billion, up 8% over the same quarter last year due to strong business performance across our platform led by the Americas regions. Non-recurring revenues represented about 7% of revenues due to an increase in custom installation work and EMEA egg-scale joint venture fees. For Q4, we expect NLR to trend downward, decreasing sequentially by approximately $12 million due to lower egg-scale fees and the timing of large customer installations. Q3 revenues net of our FX hedges included a $6 million headwind when compared to our prior guidance rates. Global Q3 adjusted EBITDA was $786 million, or 47% of revenues, at the high end of our guidance expectations due to timing of spend and low integration costs. Q3 adjusted EBITDA net of our FX hedges included a $3 million headwind compared to our prior guidance rates and $3 million of integration costs. Global Q3 AFFO was $628 million, the result of strong operating performance. consistent with our expectations. Similar to prior years, we expect seasonally higher levels of recurring capex in Q4, as our operating teams work to complete the 2021 projects. Global Q3 MRR return was 2.1%. We continue to expect MRR return for the full year to be at the lower end of our targeted quarterly range of 2% to 2.5%. Turning to our regional highlights, whose full results are covered on slides 5 through 7. The APAC region's revenue grew 11% year over year, followed by the Americas at 7% and EMEA at 6%. As previously discussed, we expect the EMEA growth rate to return to normalized levels in Q4 as we lap interconnection price increases and the other one-off positive adjustments from last year. The Americas region saw continued strength with our third consecutive quarter of record bookings with a broad distribution across metros, including some of our smaller markets, such as Boston, Denver, Mexico City, Seattle, and Toronto. The Americas sales teams continue to sell the global platform with a notable increase in activity coming from our Canadian team, a benefit derived from the transaction with Delta Canada, which is outperforming our expectations. Our EMEA region has a solid quarter with strength coming from our Amsterdam, Frankfurt, and Madrid markets as enterprise customers and the channel drive bookings. And as we aim to meet high sustainability and efficiency standards while progressing towards our 2030 science-based targets, new builds like our recently opened Frankfurt AIBX serve as a model to blend into the cityscape while positively contributing to the local microclimate. And finally, the Asia-Pacific region had a solid quarter with momentum across all of our metros led by Singapore. New deal activity focused on small to medium-sized deployments with firm pricing and continued strength in our cross-border selling. Our Hong Kong market saw a nice rebound in bookings performance, although continues to feel constrained given the market uncertainty. And now looking at our capital structure, please refer to slide 8. We ended the quarter with cash of about $1.4 billion, and our net debt leverage ratio remains low, particularly relative to our industry peers. Our balance sheet remains highly flexible and liquid, and we have a low AFFO cash payout ratio. With regards to our outstanding debt, we have minimal near-term exposure to potentially rising interest rates, with 95% of our debt fixed and a weighted average maturity of over nine years. Turning to slide 9 for the quarter, capital expenditures were approximately $678 million, including a recurring capex of $48 million. We opened 11 new projects this quarter, including new IDXs in Frankfurt, Osaka, and Singapore, and purchased land for development in Barcelona, Frankfurt, and Helsinki. On the X-scale side of the business, we opened our South Hall of Five and Frankfurt Nine assets. We also closed the first phase of our MEA II joint venture with GIC for net cash proceeds after a 20% equity contribution of approximately $140 million, including $34 million coming from the contribution of our South Polo V asset into the joint venture after quarter ends. On a separate note, we continue to actively manage our partners and suppliers and have built up an appropriate inventory of parts and components as we hedge against supply chain challenges in support of our business needs. Finally, total recurring revenues from old assets stepped up to 59% due to the acquisition of our Sydney 1 and Sydney 2 IVXs. Our capital investments deliver strong returns as shown on slide 10. Our 153 stabilized assets increased recurring revenues by 3% year-over-year on a constant currency basis. These stabilized assets are collectively 86% utilized and generate a 27% cash-on-cash return on the gross PPD invested. We expect to exit the year closer to the top end of our stabilized asset growth range, in part due to strong America's revenue growth. Please refer to slides 11 through 15 for our updated summary of 2021 guidance and bridges. Do note, our guidance now includes the anticipated results from the GPX India acquisition, which closed in September. For the full year 2021, we expect revenues to grow approximately 8% on a normalized and constant currency basis. Our updated revenue guidance implies our largest ever quarterly step up in recurring revenues on a normalized basis. a reflection of our continued strong execution. Revenues include about $5 million from the GPX acquisition and reflect updated FX rates. We expect 2021 adjusted EBITDA margins before integration costs to be greater than 47% and now include about $3 million from the GPX acquisition and reflect updated FX rates. We expect to spend $18 million of integration costs in 2021. And we expect 2021 AFFO to grow 10% to 11% on a normalized and constant currency basis compared to the prior year and to deliver AFFO per share growth of 9% to 10%. Our AFFO guidance includes some AFFO impacting accelerated spend, including recurring CapEx and elevated cash commissions associated with our strong bookings performance. 2021 CapEx is expected to range between 2.7% including about $450 million of unbalanced sheet X-scale CapEx, a significant portion of which has been or will be reimbursed by the JVs, and $193 million of recurring CapEx spent at the midpoint. So let me stop here and turn the call back to Charles.
Equinix
Thank you, Keith. Our business continues to perform exceptionally well, delivering strong and consistent results throughout these changing times. The pandemic has been a driving force for digital transformation. As businesses seek to respond to this imperative, the infrastructure underpinning these services must keep pace. We continue to prosecute multiple compelling growth vectors, expanding our platform geographically, scaling our go-to-market engine to capture new customers, and bringing new services to bear that will expand our addressable market. We are evolving the way we design, create, and deliver our products and services to fuel our growth and meet the changing needs of our customers. To that end, I'd also like to welcome Ron Gurrier to our Board of Directors. As a veteran CIO to Fortune 500 corporations and government, Ron brings a unique perspective to the Equinix board as we continue to innovate our digital infrastructure offerings for the digital leaders of today and tomorrow. I'd like to close by expressing my gratitude to our more than 10,000 employees whose commitment to keep our customers at the center of everything we do continues to drive our market leadership. They embody our commitment to show up every day with an in-service-to mindset. starting by being in service to each other, which in turn allows us to be in service to our customers, to our communities, and to you, our shareholders.
Keith
So let me stop there and open it up for questions.
Operator
Thank you. We would now like to open the phone lines for questions. If you would like to ask a question, you may press star one on your phone. If you need to withdraw your question, press star two. Our first question comes from Ari Klein from BMO Capital Markets. Please go ahead.
Ari Klein
Thanks. It sounds like new customer net ads have been up a fair bit this year, and the channel's partnerships are doing really well. Can you provide some additional color on what you're seeing there? Maybe where are you seeing the most traction from new customers and also in the channel from a regional standpoint?
Equinix
Sure. Yeah, I mean, I think we're seeing strength across the board, but really the enterprise side of the business, I think, is where a lot of the new customer ads are coming from. And most of those, about 60% are coming through channel, as we talked about in the script. So we're seeing a big uptick. As I said, more than 35% of the bookings coming through the channel. And I think it's been really encouraging. We're really seeing strength with our top channel partners and really our top alliance partners in particular. who are really engaged in joint enterprise pursuit with us in terms of pursuing hybrid multi-cloud opportunities and people implementing hybrid architectures. And so, in fact, I'll give you a stat. We had our top four alliance partners in this quarter accounted for 10% of the total bookings. And that's not 10% of the channel bookings. That's 10% of the total bookings. So really strong momentum with the channel partners. And it's across a number of verticals and it's across a number of use cases, but real strength in terms of how people are thinking about using corporate data to draw insights, how they therefore want to store that data centrally, act on it from a variety of cloud resources. And then also AI as a key driver. In fact, we had a big win, big joint win with NVIDIA on that front, as we talked about in the script. And so, you know, really, really great progress there. And I think the range of use cases is really strong. In fact, we had an event today that we call Connects that was, you know, we had, I think, about 500 registrations for that event for enterprises talking about a variety of use cases implemented on Fabric. And so we're seeing some really good momentum.
Ari Klein
Thanks. And then just on churn, it's tracking well below where it's been historically. What's driving that and how sustainable do you think that is moving forward?
Equinix
Again, I do think that that's a durable trend. I would always comment that there's some potential lumpiness in churn at times. But I think if you look at the trend line on that, it's been you know, the line of best fit is clearly downward there. And so we've had a good year. And as we said, we expect our full year turn to be, you know, toward the bottom end of the range that we talked about, two to two and a half. And I think the big driver of that is really mix of business. We're getting the right kinds of employments, right kinds of customers, right kinds of use cases. And I think that's a lot of credit to our you know, sales marketing team in terms of, you know, what they're doing from a targeting perspective and to our commercial teams in terms of how we're, you know, how we're really sort of focusing the business. So I do think it's, you know, I think it's durable and I think that's a, you know, going to be a continue to be a key driver in the business going forward.
Keith
Thanks for the call.
Operator
Our next question comes from Jordan Sadler from KeyBank Capital Markets. Please go ahead.
Keith
Thanks.
spk10
I want to touch base on some of the inflationary pressures that have been affecting folks. First, just maybe you could talk about the impact, if any, rising power costs may have had in a quarter on your full year guide, and maybe elaborate, if you could, your hedging protocol by region.
Equinix
Sure. I'll start, and then Keith can jump in if he wants to add anything. But I'd say this. Other than some small one-time items on the power side that had a slight impact on our Q4 guide, we're seeing power costs pretty much come in where we expected for the remainder of the year and into early next year. I think it's more going to be the longer-term volatility into 2022 that we're really looking at. But as you said, similar to currency, we've got a pretty extensive hedging program that really feathers in our hedges over a multi-year period. And we're about 85% hedged in the unregulated markets, which represent most of our largest markets. And so, our contracts do allow for us to adjust pricing based on underlying costs. And we're actively working to implement adjustments where we think that's appropriate. Well, again, you guys, I think, recognize our business is different in that we're more heavily circuit-based on our power mix. So, whereas it's a little more seamless to pass through those costs in a metered power environment, it takes a little more finesse to do that in the circuit-based power environment. But I would say that we are, you know, as I said, we're actively working that in terms of how to do it. And I'd say that our experience in Europe with the cross-connect pricing increases over the last couple of years is really give us some confidence that we'll be able to go get that done effectively. So no doubt there's more volatility in the energy markets, so we're watching those closely, and we're going to continue to adapt our strategies accordingly.
spk10
Okay, and just I guess as a follow-up, just one, what would the percent of the portfolio is sort of circuit billing oriented, and then When you factor in some of the ability to pass some of this through, what's sort of the benefit that you've maybe layered in there in terms of top line?
Equinix
About 80% of the portfolio is circuit-based. And, again, that's been key to our – that's part of our overall return story. We've been very effective in terms of driving – sort of aggregate returns across space and power because of that circuit-based power component of the business. It's really more a matter of how effective can we be in terms of passing through price increases or underlying cost increases in the form of price to the circuit-based power environment. Again, we have the contractual ability to do that, and it's just a matter of whether we can do it. I do think it won't be like CircuitPower where we're going to get every bit of that back, but I think that we'll look at that market by market and assess what the right approach is.
spk10
Okay. Thank you.
Keith
You bet.
Operator
Our next question comes from John Atkin from RBC Capital Markets. Please go ahead.
John Atkin
Thanks. I was interested in X scale and if you can maybe highlight any major differences with PGI and compared to GIC. And then more broadly as we sort of think about 2022 growth drivers for revenues, margins, CapEx, as well as ASFO perhaps coming from X scale. But anything to kind of keep in mind. I know you're not going to give guidance on this call, but from a qualitative perspective, tailwinds and headwinds to kind of keep in mind for next year. Thanks.
Equinix
John, I take the first one, and I think Charles might take the second one. As it relates to sort of the deal structuring between PGIM and GIC is very similar. In many ways, the construct was developed off of a contracting structure with the GIC while we worked with PGIM. Again, delighted to have another partner in a different market in support of our Australian business. As it relates to sort of our ability to – the performance this quarter. Again, as you've heard from some of our prior calls, we've basically sold out most of the capacity that we've delivered to market. And so we're very eager to continue our builds. We have eight builds currently underway in X scale. And the team is working very hard to identify appropriate customers for that capacity plus more. And so I'll just leave you with it's an exciting time for us in the X scale space. We're putting the money to work. And as Charles alluded to in his prepared remarks, $7.5 billion of of capital is going to be deployed across 34 assets and it's and you know we still have more to talk about so why don't i leave it there and just recognize that xcln of itself right now is not a big big component of our revenues or affo but it does create some lumpiness that you've seen in the non-recurring line which we highlighted in our prepared remarks q4 we just don't expect as much of that non-recurring revenue as we've seen before but certainly as we look into 22 and beyond You'll start to see that step up again from a non-recurring perspective. And then you'll also see more of the recurring fees come into play for X scale.
Equinix
Yeah, and John, on the other ones, I'd say one, you know, look, I haven't been, I'm as optimistic as I've ever been, I guess, on the business, how it's performing, what the magnitude of the opportunity ahead is. You know, a little bit of noise in the quarter here, but I think that we had a, you know, we continue, the business continues to perform. The fundamentals are very strong, 8,000 interconnection ads in the quarter, 3,000 billable cab ads, you know, record bookings really for the past three quarters, at least, you know, seasonally adjusted in terms of, you know, this is our best Q3 ever this quarter. Great degree of predictability, churn, as I said, at the low end. Firm pricing, we had another quarter of positive pricing adjustments that Keith talked about in the script, and continue to see good momentum on our new markets. If you look at big markets that we're relatively earlier entering in, in terms of places like Mexico and now India, huge opportunities in front of us there to over-indexing growth in those markets. And then digital services is really, our customers are responding really well to those products, even though they're at an earlier stage of growth. So, you know, I think as I look into 2022 in terms of, you know, headwinds, tailwinds, et cetera, feel really good about the bookings momentum, feel really good about, you know, the pricing and our relevance to customers and therefore our ability to, you know, support, you know, firm price points. Churn looks good. Good deal mix is going to continue to be absolutely key to maintaining that. You know, as I said, I think the headwinds, you know, more on You know, making sure that we continue to, you know, we talked a little bit about power as a potential headwind there in some areas. We talked about, I think, continuing to drive operational efficiencies in the business is going to be a key focus for us to drive operating leverage. And then continuing to work the backlog. I think we've got a big backlog, partially because we've got some big deals that have gone into that. We've got to continue to work them through that backlog. Certain deal types have slightly longer book-to-bill, and I think we're seeing that as part of the complexity of implementing these more multi-vendor, hybrid, multi-cloud kind of deals. And so we're continuing to, you know, sort of hone our capabilities there. So if we can continue to drive those things, you know, I think we'll be able to really take advantage of the bookings momentum that's there, and obviously we'll give you a color on all of that as we go into the 2022 guidance.
John Atkin
And then if I could throw one in on M&A, you know, whether it's networking related or software, you know, consolidation within the bare metal space, but anything kind of non-core to the classic data center business from an M&A tuck-in perspective, to what degree do you regularly look at those sorts of opportunities? And is there anything that you feel would sort of augment the platform from that perspective?
Equinix
Yeah, great question, John. I would say that we are continuing to learn in that area, and we're, you know, we're accelerating our kind of investment of energy into understanding that, you know, that landscape. And, you know, at the same time, we're still digesting and learning some of the business around digital services and how to adapt our approach and build capabilities, both from evolved capabilities, both from a design and development perspective, as well as from a you know, deployment and go-to-market perspective. And so we're continuing to, you know, hone our – cut our teeth there and really learn those things in that market. But I do think there are real opportunities there. And so we'll be – continue to be active in that area in terms of looking at potential opportunities both to add talent and technology and capabilities and really, you know, learning that landscape better, you know, over the course of this year, this next year and beyond.
John Atkin
Thanks a lot.
Operator
Our next question comes from Phil Cusick from JP Morgan. Please go ahead.
Phil Cusick
Hi, this is Richard for Phil. I just wanted to ask about the strength in the Americas. It went from kind of a modest growth to now it seems like a very strong growth environment. What are you seeing there and how long can the bookings continue?
Equinix
Hey, Richard. Well, I hope that party continues for a while. I would tell you, I think we feel pretty good about that business. Again, we spent more quarters than I would like talking about when the Verizon term was going to abate. And so I'm loving talking about the other side of that now. You know, we're really the scale of that business. Tremendous sales execution in the region, both for bookings into the region as well as global bookings, you know, to the platform elsewhere. So I would say we feel really good about the performance of the Americas region right now and expect that that growth rate is going to, you know, continue to persist at elevated levels. And so we feel good about that. In fact, I think driving attach rates now to continue to, you know, increase share of wallet with our very, very large customer base and bringing them some of our new services is some of the new area of focus and really leveraging our channel partners to do that. So anything to add there, Keith?
Equinix
No, the other thing I would just say, Charles and Richard, remember this region is 75% utilized, so we have a substantial amount of capacity that we have built and we continue to build in core markets. And the other thing I would just, you know, as Charles alluded to, not only the focus that we have on the right customers, but our sales leadership team in Americas and beyond are doing such a great job of selling the platform. And so the opportunity that you said that we talk about between inter-region and inter-region is very real. So overall, very optimistic about what we're seeing in the Americas region.
Phil Cusick
And as a quick follow-up, China used to be an issue in the Americas. Are you seeing that lower now, or has that not changed as much?
Equinix
Well, I mean, I think it was... I mean, I guess you'd have to – obviously, you've been in the story for a long time, Richard. But, you know, I think there was a period of time when we had elevated churn associated with really honing our customer mix and, you know, our core competitive advantages and making sure that we were focused on those. I would say that was back in the early days I was here in the 2011-12 timeframe when we really set about honing our sales process and driving greater deal – you know, deal commercial, you know, scrutiny, et cetera. And I think that, you know, so we had a little bit of elevated churn as we worked through that process. And then we had a little bit during the period of time when we, you know, kind of digested, you know, some of the Verizon assets. We talked about the fact over a few, you know, several quarters ago where we had deals that candidly just were outside of the traditional sweet spot that we would be focused on. And I think it's the right long-term value-creating decision for us to let those kind of things go and use that space and that capacity, you know, for advancing the strategy, you know, that we're really focused on. And so, So now you're seeing that, and as I've always said, the best way to avoid losing a deal is get the right deal in the door to begin with. And so that's where our focus is. I think our sales teams are really doing an exceptional job of that. Our new sales leader, Arkell Shaw, in the U.S., is just a dynamite sales leader doing an incredible job, and she's got a great leadership team across the board there and so on. And I've got to give some credit to John Lynn, too, our president of America. It's just a great team really driving that thing.
Phil Cusick
Great. Thank you.
Operator
Our next question comes from David Garino from Green Street. Please go ahead.
David Garino
Thanks. Hey, Charles. Can you elaborate on your comments about pricing being firm? What exactly does firm mean? And maybe specifically if that's renewals or new leases? And then also, maybe just helpful would be if you could put some data behind it on the MRR per cabinet in the U.S. Could you tell us what that was, excluding the large footprint deployments this quarter?
Equinix
Sure. Yeah, I mean, when we say firm pricing, one of the big things we talk about is when we had net positive pricing actions in the quarter. So we essentially take, you know, what we're getting in terms of, you know, uplifts on our pricing accelerators, if you will, or price increases that are contractually built in. We offset that against any, you know, potential downward movement that might occur on relays. Our business tends to move in a little bit of a sawtooth in that it's, you know, we'll see these price escalators over kind of a three- to five-year contract. We'll get a renewal that might have some re-rate, and then we'll kind of go through that cycle again. But in any given quarter, we're seeing those overall positive pricing adjustments, and that's just, I think, a reflection of our ability to sustain those higher price points. As you can see in the Americas, You know, actually in all of the, you know, we've been sort of moving, you know, MRR per cab up and to the right for a long period of time. You know, we've seen some really strong movement in EMEA over the last couple of years because of the interconnection price increasing. You know, I think we were slightly down in the U.S. on a currency basis, but that can often depend on the timing of installs and those kind of things. And so, I mean, $23.93 per cab is just an exceptional number. And so I think if you look at that relative to the rest of the industry, I think you would find it to be sort of far and away the best kind of yield in the industry. And in terms of normalizing that for large footprint, we really aren't doing any really large footprint in the US. You know, we occasionally will do an anchor deal in a facility, but we're not really, you know, active in a hyperscale or X-scale kind of space in the U.S., and we've kind of talked about why that is in the past. And if you look at, you know, even in the other markets, we're doing that now almost strictly through the X-scale business. and through the joint venture. And so that's not rolling into the results that you see here. That really only rolls into our sort of core financials in the form of fees and other things that we think are quite accretive to the overall financial picture. So that's kind of the picture on pricing. Pricing, I think, on X scale continues to be competitive, certainly, which is why returns in that business are a little lower. But that's also why we decided to go do this through joint ventures where 80% of that capital is through an advanced partner.
David Garino
Okay, and then maybe just one clarification, too, on the stabilized revenue growth at the low end, that 3% to 5% range. I know Keith said it's going to step up again next quarter, but was the drag this quarter just due to a timing of commencement on leases?
Equinix
Could you repeat that? Is the drag the timing of what?
David Garino
of commencements on leases? Was it just certain leases got pushed in the next quarter? I guess if we're going to get to the high end of the guidance rate, I would assume you have a pretty big step up in your revenue growth. So I was wondering if it was something driving it or just leases got pushed into Q4 in terms of when you'll start realizing revenue?
Equinix
Well, first and foremost, as Charles alluded to, in the end, we had just an outstanding quarter, again, from a bookings perspective. and more particularly in the Americas region. And as we just sort of talked about, the Americas enjoys the highest pricing environment. So there's a number of things that are going on. Part of it is, sure, timing, but it is also the conversion of our backlog into a billable cabinet that will make a big difference here. And so there's nothing that I would say overly extraordinary other than we're just seeing overall momentum of the business continue to scale. sure it's abated or is abating, and then you've got a good price point with the inventory that's waiting to be booked and, sorry, not booked, going from backlog into a billing item. All right, thank you.
Operator
Our next question comes from Simon Flannery from Morgan Stanley. Please go ahead.
spk08
Great. Good evening. Thanks a lot. Just coming back to the inflation and supply chain commentary, could you talk a little bit about what you're seeing on the construction and the development side of things, availability of labor, raw materials, what's going on in the various markets around the world, both in terms of costs and your ability to pass that along, as well as any impacts on timelines for development? And then you've been very active on the X scale, but in terms of other M&A, how are you thinking about the landscape out there, or is this going to be more focused on sort of small tuck-ins from here? Thank you.
Equinix
Sure. So, you know, I'd start by saying that, you know, generally I think our team has done just an exceptional job navigating the current realities as it relates to supply chains. around the world. You know, our bottom line message has been and continues to be that we really aren't seeing any meaningful negative impacts to our business. But that doesn't just magically happen. It happens by our team doing really great work to, you know, go and make sure that we are mitigating the risks that are out there. You know, the way we talk about it internally is really four kind of levels to the supply chain, you know, potential risks. The first one is really facility level, or in other words, you know, are those constraints out there impacting our ability to deliver projects on time and on budget? And while we've seen some modest level of delays on a few projects, those are typically actually more associated with COVID delays than they are supply chain, candidly. As KT noted in the script, we've actually taken on some inventory or contractual forward commits to the tune of about $100 million that is giving us you know, the confidence to be able to make sure that we can deliver our projects on time. That combined with the fact that we've got a huge number of projects underway and they're all over the world and we can move stuff around. Typically it's fungible between sort of projects. And so, you know, the team, the construction team, the procurement team, the sourcing team have just done a phenomenal job in terms of mitigating that in terms of IBX availability and the delivery timelines. You know, the next level on it is really at the services level. In other words, are our underlying services, particularly our network-related services like fabric, you know, connect, et cetera, and metal, do we have the capacity to support the forecast there? And what we've done there is we've just forward purchased, you know, several quarters of capacity to give us the confidence that we can, you know, we can support that. And so feeling good about that as well. The third level is really deployment level. In other words, cage materials and other things that are needed as people build out their cages. And we've also stockpiled there. Occasionally, there are circumstances where people have non-standard items that cause delays. But if they're sticking within the, you know, sort of the middle of the bell curve in terms of what their needs are, we're not seeing any delays there. And then customer-level delays is sort of the last level of it, which is our customer's you know, delayed in terms of getting their IT equipment to load into the deployments, you know, and if not, are they delaying or asking for delays for commencement and those kind of things. And, again, while we've seen, you know, a few of those things, they just, in the grand scope of things and in the scale of our business, are just not particularly meaningful. So there's some, you know, there's probably a little bit of pressure on costs in some areas. We've been able to take advantage of our scale, I think, to mitigate that. We're continuing to, you know, people often ask the question as to whether, you know, cost to build is inflationary or not. I would tell you that I think we've been able to keep up with it from a design standpoint and continuing to optimize our designs faster than, you know, costs are going up. So we're trying to keep ahead of the game there. You know, but I think our team's done a really, you know, terrific job of managing those things. And I do think that we expect that things will start to stabilize over the course of 2022 from a supply chain perspective. So long answer there, but hopefully that gives you some perspective.
Keith
Great color in the M&A. I'm sorry.
Equinix
And from an M&A perspective, I would say, you know, we are, you know, we continue to think there's opportunity out there. I mean, we talked, I think John asked a question about M&A and the, in sort of the digital services side of the business, but there's also, you know, we think continued opportunity in terms of extending our reach and, you know, you know, looking for, you know, critical assets in the market that might be accretive to our strategy. And so, And we've got the balance sheet and the firepower to go after those kinds of things. And so we'll continue to be active as appropriate there, always with a high degree of scrutiny on getting the right deals.
Keith
Great. Thank you.
Operator
Our next question comes from Michael Rollins from Citi. Please go ahead.
Michael Rollins
Thanks, and good afternoon. Curious for two questions. The first one is when you look at what's happening on the network side for network customers, are you seeing an increasing amount of telecom and wireless companies place their core network infrastructure in your facilities rather than having their own mobile switching offices that they might have had in kind of the more legacy years of the telecom landscape and what kind of opportunity that is for you as you look at wireless and 5G trying to take more services to the edge. And then the second question is, what do you make of the tower companies investing in data center assets? And do you believe that your data center business, as well as tower portfolios, are destined to be partners or maybe someday fall under the same ownership structure as you look at into the future?
Equinix
Great questions, Mike, for sure. I would say on the network side, I'd say it's a mixed bag. You know, I think that there is a movement towards people viewing third-party facilities, particularly, you know, facilities like Equinix where there's large degrees of aggregation as logical places to put portions of their core infrastructure. That said, you know, I think these companies are also – you know, have a long history of building on, you know, in their own facilities. And I think that is, there are still a lot of forces within those companies that want that to continue. And so I think, you know, we've been very active on the business development front, and we have seen some success there. in terms of how they might think about putting certain portions of their core 5G infrastructure, for example, into our facilities. And we have the Dallas Proof of Concept Center there that we've been actively working with both equipment providers as well as service providers on sort of proving out some of those potential value propositions. So I think we're still – that will happen over – you know, a long course of time. I do think we're more successful with people who are coming into those markets as disruptors because they think differently about it. And so, and I do think there are some pretty interesting opportunities there. And we're working with a few that I want to say the names right now, but I'm not sure that they are publicly, that I can, so I won't. But there's some interesting things going on there. As to the tower side, You know, we believe there is some synergy between, you know, sort of companies that have broad-based real estate assets that are sort of proximate to, you know, communications infrastructure, which is sort of the definition of tower companies. And I can see why and understand why they may have an interest in data center assets and how they fit in potentially to their portfolio. But I would tell you that for the most part, you know, we see a strong demand for traffic at the edge there to, you know, a very significant majority of that traffic. to go back to the aggregated edge. And that's really our sweet spot. That's where our differentiation is. Definitely there are use cases that where, you know, mobile edge compute, you know, out further, you know, things like shop floor automation and those kind of things. I think there are real use cases that 5G is going to, you know, be able to accelerate. And we're certainly keeping our eyes on that and being active in there from a business development standpoint. But I do think that, I think it's more likely that we would partner in some way with those folks over time. It's not necessarily obvious to me that those have to live under the same ownership structure. So, but, you know, I think we'll just have to continue to see how the markets play out. Keith, I don't know if you have a different view on that.
Equinix
Thank you. We'll see.
Operator
Thanks. Our next question comes from Eric Rasmussen from Stiefel. Please go ahead.
Eric Rasmussen
Yeah, thanks for the questions. So getting back to X-Scale, you obviously made a lot of progress in Europe and APAC thus far, and recently announcing another JV partner in Australia. But I guess circling back, at what point has America become more interesting now? As you look to expand to X scale, are you seeing any characteristics that, you know, are starting to get more exciting about this market than what you're seeing elsewhere or sort of in the same sort of scenario?
Equinix
Well, I think when people stop cutting each other's throats on pricing, it'll be a little more interesting. But it's not a – I mean, it's still a very competitive market, I think. And so, you know, I think that's different in terms of You know, if you look at the broad Americas, you know, because I think there's opportunities in Latin for us. Obviously, we've already announced projects in Brazil. I think we bring some very distinctive advantages there. You know, I do think there's a ton of demand. And as we've always said, we're not... We're not, you know, we're not going to say we're religiously out of the business of doing that, but I think it would have to be under a special set of circumstances in terms of why we think that fits with the strategy. Because, you know, the strategy, as you'll recall, is that, you know, we wanted to use those as opportunities to further our position in the cloud ecosystem, continue to invest in the relationship with the major cloud service providers and sort of broader set of hyperscalers. and use that to, you know, create this advantage overall position in the cloud ecosystem. We feel very good about our position, particularly in the U.S., and, you know, whether or not the, you know, X scale would be particularly accretive to that, I think, is an open question. So, but we're not, you know, we're definitely not, it's not out of the question that we would do that. I just think it's, I think right now there are a lot of opportunities for us in other markets that we think are more attractive.
Eric Rasmussen
Okay, and maybe just my follow-up. You know, the Americas was strong, you know, once again this quarter. Would you characterize that, you know, most of the strength is coming maybe from Bell Canada, or is it, you know, other factors that, you know, you can comment on as it relates to the strength in that region?
Equinix
Well, there was a reference in the prepared remarks just to talk about Canadian business is better than our, you know, it's doing better than we originally anticipated, and good on the team, and they're also selling the global platform out of Canada into our other assets around the world. As it specifically relates to the Americas business, I think it goes back to some of the fundamentals that Charles alluded to. You know, we're targeting the right customers with the right applications and putting them in the right places. And by the same token, we've got an inventory set that really caters to a diverse set of customers across the U.S. or the Americas as a whole. And so between the assets we serve, the customers we target, and the delivery of services that are additive to co-location interconnection, I just think we're in a much better space or position. And as a result, we're going to win more than our fair share of the businesses out there.
Eric Rasmussen
Great. Thank you.
Operator
Our next question comes from Colby Sinensel from Cowan. Please go ahead.
spk04
Great, thank you. Charles, in response to Jonathan Atkins' question regarding your outlook on 2022, my take from your response was the top line looks fine, but your concern is around margins, whether it's operational efficiencies or, in particular, power costs. And as it relates to the question around power costs, I feel you may have created more questions than answers so far on this call. And I I'd love to get a little bit more detail. Um, specifically you guys, I think had talked about it, your analyst day in June, seeing margins go up just modestly in 2022. I'm curious if you still think that that's possible. Secondly, you mentioned that you hedge in unregulated markets around 85%. How far out are those hedges? It seems like you're suggesting that you're okay with power costs going into 2022, but not necessarily for the full year. And then as it relates to the potential impact of power, do you think at the end of the day this could be a 25 basis point impact, 50 basis point impact, hundreds of basis point impact, just anything that gives us a better sense? Because my concern personally is that we could now be in a situation where margins go down in 2022. And then just lastly, as it relates to AFFO, it looks like AFFO guidance implies a pretty meaningful step down in the fourth quarter. Is that just the maintenance CapEx component that you talked about, Keith, or is there something else there? And what's the better jump-off point as we look to go to 2022? Is it the third quarter or is it the fourth quarter? Thank you.
Equinix
Yeah, good questions, Colby. I'm not sure we'll be able to give you all the answers there, but I would say, and obviously we're not going to kind of give you a 2022 guide, but, you know, I would say that Generally, I would say we continue to feel good about the momentum in the business from a bookings and a demand perspective. I think that we did talk about driving efficiencies, and I think the pursuit of the 50 percent margin target is something we continue to be focused on, and that's an area where we continue to have work to do exactly at what pace we can do that and what that implies for the 2022 margin. I don't know. And I do think it will require us to dig in deeper on power. And I don't think we're yet in a position where we can quantify any of that for you, other than in terms of the hedging that we, I mean, they are multi-year hedges, but they're feathered in. And so obviously they do become less impactful as you look further out. And so I do think that there's more risk as you go out. But I think the good part of that is that It gives us time to determine what our approach is going to be to passing those costs through and assessing how to do that and to what degree that is, how much of a recovery we can see there. And we don't know the answers to all those things. And so I think we're going to track those. We're going to look at the markets where there's volatility. And I think that's something where, unfortunately, I think we'll just have to come back to you, you know, when we look into the, as we look into the 2022 guide and give you, you know, more perspective on that.
Equinix
And so Colby, I just wanted to go back to, again, a couple of your other questions. So there's two things that I thought I heard you ask. Number one, It's what's happening quarter by quarter, what's going on in Q4. And there was a reference that we made and that we accelerated some costs into this year. So that's number one, both from a recurring CapEx perspective and some operating spend. We did that for a number of reasons, and part of it is supply chain specific. The other part, as we alluded to in the prepared remarks, when you look at AFFO in and of itself, Q4 is historically one of our lower performing AFFO quarters. That's why we don't guide on a quarterly basis. We give you the annual numbers and say this is what we will do, and we recognize things will move around. But the reality is Q4 always tends to be a higher recurring recurring capex quarter, and that's what you're seeing in the guide that we've delivered at $193 million at midpoint. So it gives you a real sense of a big step up in our recurring capex for Q4. The other thing, as we've said, that we've had a lot of success in the business, and as a result, the cash payout attributed to commissions is more substantial than we originally anticipated in Q4, and that's reflected in the guide. And that's AFFO impacting on EBITDA impacting. And so there's a lot of nuances. But overall, when you look at the fundamental business, it's performed better than we anticipated for every single quarter of the year. We're delivering against the expectations we've set. And as I think you know well, we've raised our guide both on revenue, EBITDA, and AFFO throughout the year. And we're at a point now where we feel comfortable, and now we're focusing on 2022. And that's And that's where the energy of the business is, again, focused on.
Keith
Thank you.
Operator
Thank you. And our final question comes from Frank Loutzen from Raymond James. Please go ahead.
Keith
About the bounce in America. It's been a tougher market the last few years.
spk14
What sort of change there, and how long do you think you can continue to see some better results out of this market? Thanks.
Equinix
Hey, Frank. Yeah, as I said earlier, I think that business has a strong trajectory. I think we expect that to continue. We don't see this as a temporary improvement. I think the business is moving in a very solid direction, strong demand from customers, good sales execution. And, again, we don't expect that. And, again, churn mitigating, getting the right customers, right deals, I think that will continue to drive strong performance from that region, which obviously is a pretty major driver of our overall performance.
spk14
Can we expect this to be a little bit of a new baseline and continue to grow from here, or how should we think about the current trend?
Equinix
As to whether it really accelerates, I think that we have to continue to look at our success you know, driving, you know, new services revenues and, you know, what the rate of new customer, you know, capture and attaches and those kind of things. But, again, I think we feel really good about where the business is right now and feel like that's a sustainable growth rate for us.
Keith
All right, great. Thank you very much.
spk02
That concludes our Q3 call. Thank you for joining us.
Operator
Thank you all for participating in today's conference. You may disconnect your line and enjoy the rest of your day.
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