Equinix, Inc.

Good afternoon and welcome to the Equinix Fourth Quarter Earnings Conference Call. All lines will be on 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 like to now turn the call over to Katrina Reimel, Senior Vice President of Corporate Finance 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 filing with the SEC, including our most recent Form 10-K, filed on February 19, 2021, and 10-Q, filed on November 4, 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 the financial guidance during the quarter unless it is done through an explicit public disclosure. In addition, we will provide non-GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why the company uses these measures in today's press release on the Equinix IR page at www.equinix.com. We have made available on the IR page of our website a presentation designed to accompany this discussion, along with certain supplemental financial information and other data. We'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 following questions to just one. At this time, I'll turn the call over to Charles.

Thanks, Katrina. Good afternoon, everybody, and welcome to our fourth quarter earnings call. We had a great finish to the year with our best bookings performance ever driven by an exceptional demand backdrop for our business, with continued strength across our platform, but more specifically in the Americas, low churn and continued momentum in our digital services portfolio. For the full year, we achieved over $6.6 billion of revenue, marking our 76th consecutive quarter of top-line increases, an amazing 19 years of continuous revenue growth, while driving attractive ASFO share to the bottom line. Amidst the dynamic and complex global landscape, we continue to deliver against our vision, and our fiscal year results demonstrate both the increasing relevance of our platform and our uniquely differentiated value proposition. Businesses globally continue to prioritize digital transformation as a foundational source of competitive advantage, and the secular drivers for our business have never been stronger, as digital leaders demand infrastructure that is more distributed, more ecosystem-powered, more flexible, more sustainable, and more interconnected than ever before. Increasingly, Equinix represents a critical point of nexus as customers implement hybrid and multi-cloud as the clear architecture of choice. And as a global market leader, we continue to innovate and expand our portfolio to respond to these evolving customer demands and capture the enormous opportunity ahead. As we look to 2022, the trajectory and underlying momentum in our business is exceptionally strong. with a solid demand pipeline, stable churn, and a rising price trend, resulting in a revenue outlook for the year that is at or above the high end of our long-term guidance range, and an AFFO per share outlook that is still within our long-term guidance range, despite pressure at the gross margin line associated with power price volatility in Singapore. Absent these specific dynamics, our underlying business performance would be producing AFFO per share growth towards the high end of our annual estate guidance, well ahead of our expectations. We have a robust global power hedging program that has been and we expect will continue to be highly effective at smoothing utility price volatility over the years, providing predictability and value across markets for Equinix and our customers. We believe the current dislocation in Singapore is transitory, with power prices showing signs of moderating in the second half of the year. Bottom line, the business is performing very well, and we remain on track to meeting or exceeding our analyst day objectives for both top-line revenue and AFFO per share growth And as we see these temporary headwinds moderate and continue to realize efficiency gains from prior year investments, we have a strong resolve and continued confidence in our ability to scale adjusted EBITDA margin to 50% by 2025. Turning to our results as depicted on slide three, revenues for the full year were $6.6 billion, up 8% year-over-year. Adjusted EBITDA was also up 8% year-over-year, and ASFO per share grew 9% year-over-year. Interconnection revenues for the quarter grew 12% year-over-year with solid unit ads reflecting strong momentum with Equinix Fabric as expanding use cases drive connections to more locations and more counterparties. These growth rates are all on a normalized and constant currency basis. Our global reach remains as important as ever. IEC predicts that by 2025, more than 50% of enterprise data will be generated at the edge, and customers continue to see Equinix as the best manifestation of the digital edge. This competitive differentiation continues to drive our business, with revenues from multi-region customers increasing 1% quarter-over-quarter to an impressive 75%. In December, we announced our long-awaited entry into Africa with our intended acquisition of MainOne, a leading West African data center and connectivity solution provider with a presence in Nigeria, Ghana, and the Ivory Coast, set to close in early Q2. This acquisition will mark the first step in Equincy's long-term strategy to become one of Africa's leading digital infrastructure providers and will position us well in the continent's largest economy. To fuel our ongoing global interconnection leadership, we're also targeting strategic Internet traffic flows by supporting and winning subsea cables such as Elelink, the first-ever subsea cable between Europe and Latin America, which recently went into operation with POPs in our South Hollow 4, Lisbon 1, and Madrid 2 IVXs. and by entering new markets like our recently completed Genoa Italy IBX and our newly announced IBX in Salala, Oman. Our data center services portfolio remains the bedrock of platform equinix, and we're excited about the recent appointment of John Lin to the position of EBP and general manager for data center services. John has delivered extraordinary results as the president of our Americas business and is a great choice to implement our strategy and extend our global market leadership and interconnected co-location. To that end, we continue to expand on our global footprint with 41 major projects underway across 28 metros in 19 countries, representing over 20,000 cabinets of retail and over 80 megawatts of X-scale capacity. We remain focused on simplifying, automating, and digitizing our services, allowing us to scale our business and enhance operating leverage, and we're already seeing the results of these efforts. For example, we recently launched our new SecureCab Express product, leveraging pre-deployed capacity to dramatically reduce cycle times and enable online quoting and ordering for our most commonly requested configurations. We expect to roll this new service out to customers in the coming quarters, driving increased customer responsiveness while simultaneously enhancing margins. Our global interconnection franchise continues to perform well, and we now have over 419,000 interconnections on our industry-leading platform. In Q4, we added an incremental 7,500 organic interconnections as enterprises drive growth and further enhance our ecosystem density. Internet exchange saw peak traffic up 6% quarter-over-quarter and 27% year-over-year, with peak traffic in APAC surpassing 10 terabits per second for the first time as service providers increasingly look to IX to improve Internet traffic delivery. Turning to digital infrastructure services, cloud computing has permanently reshaped customer expectations for speed and simplicity. Customers want to deploy infrastructure where they want it, when they want it, seamlessly integrating cloud-based workloads and private infrastructure and enabling agility and performance between the two. As a result, customers are embracing a broader set of our services, combining fabric, metal, and network edge to build virtual points of presence. And our planned expansions will fully enable this capability across 30 markets by the end of 2022. For the quarter, Equinix Fabric saw excellent growth, eclipsing $150 million in revenue run rate with a third of our customers now using Fabric for a variety of use cases across a broad set of destinations. Our Equinix metal business delivered strong results with a great mix of wins and new logos across verticals and a healthy backlog. And Network Edge saw continued traction with growth from new and existing customers as they used the service to implement WAN optimization and cloud-to-cloud routing. Shifting to Xscale, in January, we announced plans to expand Xscale into South Korea with an agreement to establish a $525 million joint venture with GIC to develop two data centers in Seoul. Total investment in our various hyperscale joint ventures, when closed and fully built out, is now expected to be more than $8 billion across 36 facilities globally, with more than 720 megawatts of power capacity. We currently have nine X-scale builds under development, and during the quarter, we fully leased the first phase of our Frankfurt 11 asset and the first and second phases of our Sao Paulo 5 asset, representing approximately 20 megawatts of capacity. Total X-scale leasing is now over 130 megawatts, and our initial JV in EMEA is over 80% leased. Now let me cover some of the highlights from our verticals. Our network vertical had solid bookings quarter with healthy new logo activity led by the Americas as companies expand and optimize digital capabilities to support both the delivery and consumption of data at the edge. New wins and expansions included a Fortune 200 telecom company deploying infrastructure to support the U.S.' 's first cloud-native, open-RAN-based 5G network. InLego Networks, an Australian cable systems operator, deploying digital infrastructure to support a new subsea cable across Southeast Asia, Australia, and the U.S., and an African local telco deploying a network hub in Lisbon to improve peering and performance. Our enterprise vertical saw another quarter of record bookings, as IDC predicts almost half of the global economy will be based on or influenced by digital in 2022, fueling strong demand for hybrid infrastructure. Q4 had particular strength in fintech, industrial services, and energy subsegments, with wins and expansions including NASDAQ, a Fortune 500 technology company, scaling its cloud-enabled infrastructure to deliver ultra-low latency edge compute capabilities from our NY11 data center in Carteret. Avaya, a cloud communications and workstream collaboration company, implementing an edge data center strategy on platform Equinix to streamline private connectivity for its customers. And ADT, the U.S.' 's leading smart home security provider, embracing the cloud with an infrastructure modernization effort spanning multiple geographies. Our cloud and IT services vertical also had solid bookings this quarter, led by the software and infrastructure subsegments, with good momentum in EMEA and APAC. Expansions included Zscaler, a leading Global 2000 security cloud provider, upgrading capacity for sustainable enterprise cloud transformations and growing network traffic at the edge. Wiz Technologies, a Singaporean full-suite IT service provider, deploying on Equinix Metal, and upgrading fabric services to support quick and seamless business expansion. And Oracle, a top-five mobile software provider, deploying FastConnect Cloud on-ramps to support new regions in Singapore, Milan, and Stockholm, bringing their total number of on-ramps available at Equinix to 24, more than any of their other partners. Our content and digital media vertical had strong lookings, led by the publishing and digital media subsegments and record channel activity. Expansions included CloudFlare, the US-based global web infrastructure and security company, upgrading and expanding their footprint in over 40 markets. Index Exchange, a global ad tech marketplace, expanding compute nodes in APAC to manage traffic growth, and a top three global credit agency, deploying regional network and cloud hubs in APAC to support its operations. Our channel program delivered a record quarter to close the year, accounting for 40% of bookings, and nearly 60% of new logos. And we have line of sight for channels to grow to 50% of our bookings in the coming years as we enhance our systems and processes and leverage our diverse set of partners to scale our reach. WINS were across a wide range of industry verticals and use cases with continued strength from strategic partners like Microsoft. Dell, Cisco, Google, and BT, including a significant win with Wipro and AT&T helping a utility company modernize its IT infrastructure in Europe and the U.S. So now it's time to call over Keith and cover the results for the quarter. Thanks, Charles.