Equinix, Inc.

Good afternoon and welcome to the Equinix Second Quarter Earnings Conference Call. All lines will be able to listen only until we open 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 call over to Chip Newcomb, Director of Investor Relations. You may begin.

Good afternoon and welcome to today's conference call. Before we get started, I would like to remind everyone that some of the statements we will 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've identified in today's press release and those identified in our filings with the SEC, including our most recent form, 10-K, filed February 18, 2022, and 10-Q, filed April 29, 2022. 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 to not comment on financial guidance during the quarter unless it is done through an explicit public disclosure. In addition, we will provide non-GAAP measures on today's conference call. We provide a reconciliation of those measures 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 Investor Relations 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 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 the call up in one hour, we would like to ask these analysts to limit any follow-on questions to one. At this time, I'll turn the call over to Charles. Thank you, Chip.

Good afternoon, and welcome to our second quarter earnings call. On the heels of a record Q1, we had an outstanding Q2, with strong and sustained demand across our product portfolio, broad pricing momentum, and solid sales execution, with particular strength in Americas and EMEA, resulting in record growth and net bookings and our best-ever quarterly revenue step-up. As our customers progress and accelerate their digital transformation journeys, the relevance of Platform Equinix continues to grow. In our recent Global Tech Trends survey, nearly 70% of the 2,900 IT decision-makers polled indicated their intention to adopt private or hybrid as their cloud architecture of choice, with over 45% of those polled working with three or more cloud providers, and over 80% indicating their intention to sustain or increase their spend on interconnection. Today, we're seeing this demand for interconnected digital infrastructure across our regions, This quarter's booking sizably surpassed the prior peak, a great indicator of the strength of the business and our go-forward pipeline. Our business remains resilient and highly diversified, with nearly a third of our 10,000-plus customers closing incremental business in any given quarter. Despite macro conditions, this customer demand, paired with lower-than-expected churn, is driving us above the upper end of our Analyst Day revenue guidance this year. and benefiting our AFFO per share guide with the impact of pricing increases still largely unrealized. Turning to our results as depicted on slide three, revenues for Q2 were $1.8 billion, up 10% over the same quarter last year, representing our 78th consecutive quarter of top line revenue growth, a clear reflection of the durability of our business model across economic cycles. Adjusted EBITDA was up 8% year-over-year with ASFO meaningfully ahead of our expectations due to continued strong operating performance. Interconnection revenues continue to outpace the broader business, growing 13% year-over-year. These growth rates are all on a normalized and constant currency basis. Customers continue to embrace Equinix as the best manifestation of the interconnected digital edge. and we continue to scale, extend, and innovate across our data center services portfolio. We now have 49 major projects underway across 34 metros in 21 countries, with 13 new projects this quarter, including new data center builds in Dublin, Montreal, New York, Paris, Warsaw, and our first build in Chennai, India, the first of several anticipated metro expansions in this fast-growing market. Our unparalleled global scale and reach continues to be a strategic advantage, driving success with service providers looking to extend their reach and rapidly implement as-a-service models, and with enterprise customers across nearly every sector of the global economy as they modernize their infrastructure and embrace hybrid and multi-cloud. WINS this quarter included a multinational energy conglomerate implementing their hybrid cloud strategy across multiple regions, leveraging Network Edge and Equinix Fabric, And F5, a global technology leader in application security and multi-cloud networking, establishing additional networking nodes in all three regions to better support their customers. In May, we closed our acquisition of four data centers from Intel, extending platform Equinix into Chile and bringing our global footprint to 70 metros across 31 countries. Equinix has a decade-long history in Latin America, and this acquisition provides significant expansion capacity enabling both local businesses and multinationals the opportunity to accelerate their digital transformation and their LATAM aspirations. We also expect to close on the acquisition of one additional data center from Intel, extending our reach to Lima, Peru in Q3. As the world's digital infrastructure company, we believe it's our responsibility to help bring about a more sustainable future. In 2022, we continue to advance our bold future-first sustainability strategy, and are pleased to have been recognized by Sustainalytics as among the best large cap REITs for ESG and to be ranked seventh on US EPA's national top 100 list of the largest green power users. We continue to accelerate the transition to cleaner energy grids and recently executed our second virtual power purchase agreement in Finland. Once operational, these two new wind projects combined with our prior projects will bring Equinix's total renewable DPPA capacity to 300 megawatts. And we continue to explore additional PPA projects across all three regions as we progress towards our goal of 100% clean and renewable energy. Turning to our industry-leading interconnection franchise, we're seeing continued diversification of our ecosystems and robust activity, including a win with Fast Shop, one of Brazil's largest electronics retailers, who chose Equinix to help strengthen interconnection for its digital core, improve cloud connectivity, and integrate with the digital retail ecosystem. In Q2, we added an incremental 7,600 interconnections and now have over 435,000 total interconnections on our platform. Equinix Fabric saw a notable increase in provision capacity as channel enablement is driving network resale use cases and customers are increasingly using inter-metro connections on Fabric to connect across their deployments, including a win with Spady, a cybersecurity company in the Netherlands using Equinix Fabric to connect deployments in Amsterdam and London to provide connectivity for its customers as part of its business expansion. Internet exchange saw peak traffic up 4% quarter over quarter and 25% year over year to greater than 25 terabits per second. Pivoting to our digital services portfolio will continue to see strong growth and significant opportunity as customers increasingly leverage more virtual as a service and edge solutions. Equinix Metal had a strong bookings quarter as partner-driven solutions like Pure Storage and Dell PowerStore on Equinix Metal are driving performance-centric hybrid cloud opportunities with enterprise customers. Network Edge also had a strong quarter, with a notable increase in large multi-instance deployments from enterprise customers. Both Metal and Network Edge are also driving attractive revenue pull-through to Equinix Fabric. Digital Services wins this quarter including Protocol Labs, an open source R&D lab increasing its usage of Equinix Metal to support projects that decentralize the web and cloud storage. And a leading waste management services provider leveraging Fortinet on network edge to connect their business units in Asia to their data centers in the US across Equinix Fabric. Our strategy remains simple, to translate our unique and durable advantages into being the platform where buyers and sellers of digital services can come together, enabling them to deploy and interconnect the infrastructure that they need to transform their business. For service providers, demand remains robust as businesses around the world are planning major investments in digital technologies to support ambitious expansion plans following lessons learned from the pandemic. This year, Gartner projects that global spending on public cloud services will reach nearly $500 billion, and we're seeing strong demand across multiple vectors with these key cloud and IT customers. In the quarter, we added three new cloud on-ramps in Paris and London, and now have nearly 200 on-ramps to the major cloud service providers deployed on our platform, making Equinix the home of hybrid multi-cloud. We also continue to see tremendous success supporting our hyperscale partners as they invest in subsea cables to facilitate the rapid growth of internet traffic between continents. And in addition to being an integral part of hyperscale architectures, we continue to drive go-to-market alignment with these market-shaping players, partnering to meet end customer needs for hybrid cloud and making the hyperscalers some of our most productive channel partners. Hyperscaler demand for our X-scale offering also remains robust. We had high leasing activity in Q2, pre-leasing our entire double and six asset, the first phase of our Paris 13 asset, and the second phase of our Frankfurt 11 asset, representing more than 38 megawatts of capacity. Looking across the various X-scale JVs, we've seen strong demand with over 170 megawatts now leased across our portfolio. We currently have 11 X scale builds under development, of which more than 80% is pre-leased. On the enterprise side, Gartner also continues to view digital transformation not as a one or two year trend, but as a systemic and long term theme. Our pipeline strongly supports this thesis and our enterprise activity this quarter was robust, with Americans and EMEA regions driving record bookings with particular strength in banking and healthcare. Expansions included a leading U.S. healthcare software vendor creating an edge hosting environment on the West Coast, and the Hertz Corporation, one of the largest worldwide vehicle rental companies, who deployed on platform Equinix to support its digital transformation journey, locating infrastructure proximate to cloud providers and tapping into our digital solutions. And once again, our channel program continued to thrive, delivering its fifth consecutive quarter record bookings, including strong performances for our EMEA and APAC regions, accounting for more than 35% of bookings and nearly 60% of new logos. Wins were across a wide range of industry verticals and digital-first use cases, with hybrid multi-cloud as the clear architecture of choice. We saw strength from strategic partners like AT&T, Cisco, Dell, Google, and Microsoft, including a win with Orange Business Services for a security services technology company to deploy their payment card encryption solution while interconnecting to our financial services and cloud ecosystems. We're also proud to have been named HPE GreenLake's Momentum Partner of the Year for 2022 as we together work to deliver a consistent hybrid and multi-cloud experience for our joint customers. Now, let me turn the call over to Keith and cover the results for the quarter.