Equinix, Inc.

Good afternoon and welcome to the Equinix Fourth Quarter Earnings Conference Call. All lines will be able to listen only until we open for questions. Also, today's conference is being recorded. If anyone has objections, please disconnect at this time. I'd now like to turn the call over to 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 November 4, 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 not to comment on its financial guidance during the quarter unless it is done through an explicit public disclosure. In addition, we'll provide non-GAAP measures on today's conference call. We provide a reconciliation of those 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 Investor Relations page at www.equinix.com. We have made available on the IR page of our website a presentation designed to accompany the 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 sell-side analysts. In the interest of wrapping the call up in one hour, we 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, everybody, and welcome to our fourth quarter earnings call. We had a great finish to 2022, delivering one of the best bookings performances in our history, led by the Americas, with continued strength and demand and favorable pricing trends across all three regions. For the full year, we delivered more than $7 billion in revenue for the first time and completed our 80th consecutive quarter of revenue growth, an amazing 20 years of continuous growth, all while driving AFFO per share performance above the top end of our long-term expectations. As we look to the year ahead, even amidst a dynamic and complex global landscape, it is increasingly clear that the secular tailwinds of digital transformation remain strong. In 2023, IDC estimates spending on digital technology by organizations will grow eight times faster than the broader economy. In the current macroeconomic environment, we believe spending on digital transformation will remain robust for two simple reasons. First, as companies work harder for each incremental revenue dollar, digital is seen as a critical driver of competitive differentiation, accelerating time to market and enabling products that evolution. And second, digital transformation is increasingly a means to do more with less, enabling businesses to reduce costs and drive operating leverage while simultaneously becoming more agile and responsive in serving their customers. In the context of this secular demand environment, we remain confident that Platform Equinix is uniquely positioned to support our customers' digital infrastructure needs. Digital leaders are demanding infrastructure that is more distributed, more ecosystem-powered, more flexible, and more interconnected because it is fundamental to their ability to differentiate in the marketplace and lower their costs. Our market-leading global reach, vibrant digital ecosystems, and comprehensive interconnection platform allow our customers to scale with agility, speed the launch of digital services, deliver world-class experiences, and enhance value to all their stakeholders. While we will continue to closely monitor the macro environment and will adapt our execution accordingly, the fundamentals of our business remain strong, and we're investing behind the momentum we're seeing, including adding quota-bearing heads, evolving our product set, and expanding our industry-leading data center portfolio. With regards to power, our multi-year hedging efforts continue to create visibility and predictability for Equinix and our customers in the coming year. Effective January 1st, we raised pricing, passing on the full impact of these additional power costs to our customers, increasing costs but giving our customers much-needed budget certainty, and in most cases, leaving them with rates below the prevailing spot market. Overall, we believe we remain in a good position relative to competitors and the broader market, and I'm pleased with where we landed for our customers and our business. Turning to our results, as depicted on slide three, revenues for the full year were $7.3 billion, up 11% year-over-year. Adjusted EBITDA was up 8% year-over-year, and AFFO per share grew 11% year-over-year. These growth rates are all on a normalized and constant currency basis. Our data center services portfolio continues to extend its scale and reach. And given strong demand and high utilization, we see continued opportunity to deliver highly attractive returns on capital, as evidenced by the largest development pipeline in our history. We currently have 49 major projects underway across 35 metros in 23 countries, including nine X-scale projects representing over 34,000 cabinets of retail and over 75 megawatts of X-scale capacity. New projects this quarter include new data center builds in Istanbul, Seoul, and Tokyo, and our first builds in both Johannesburg, South Africa, and Johor, Malaysia. Our new IBX in Johannesburg augments our current footprint in Africa, entering the largest and most digitally developed nation on the continent. And our new IBX in Johor represents our entry into one of the most requested markets in Asia Pacific by our global customers. Equinix remains the best manifestation of the interconnected digital edge, And with these new builds, our unparalleled global footprint will span 75 metros and 35 countries. The strength of our global platform continues to shine, with nearly 90% of our revenue coming from customers operating in multiple metros, and nearly two-thirds coming from customers operating in all three regions. Key multi-market wins this quarter included one of the world's leading hospitality companies finding performance gains at the edge by deploying in strategic markets across all three regions. and a leading cloud and CDN provider, extending coverage and scaling globally to support new services and meet growing demand. IDC estimates that more than 750 million cloud-native applications will be developed globally by 2025. And as this digital transformation wave continues, customers see Equinix as the logical point of nexus for hybrid and multicloud deployments. This quarter, we won four new cloud on-ramps, including one in Mumbai, making it the 12th metro on-platform Equinix, enabled with native cloud on-ramps from all five of the leading cloud providers. No other data center operator has more than one metro with all five clouds. In our X-scale business, we continue to see strong overall demand, leasing approximately 8 megawatts of capacity across our Tokyo 12 and Osaka 2 assets, with meaningful expansions in our forward pipeline. Enterprise wins leveraging the cloud this quarter include a global technology company in the payments industry, deploying infrastructure to place their corporate and customer networks closer to AWS and Azure, and a leading paints and coatings company choosing Equinix for its cloud on-ramp capabilities and virtualized service offerings. Our industry-leading interconnection franchise continues to perform well, with revenues for the quarter growing 13% year over year on a normalized and constant currency basis, outpacing the broader business. We now have over 446,000 total interconnections on our platform. In Q4, we had an incremental 4,500 organic interconnections, slightly lower than our historical run rate due to seasonally slower gross ads, customer consolidations into higher bandwidth VCs on fabric, and some elevated grooming activity. Equinix Fabric saw continued growth and is now operating at a $200 million revenue run rate, one of our fastest growing products. Attach rates for Fabric continue to move higher, with 40% of customers realizing the benefits of connecting their digital infrastructure at software speed. Internet Exchange saw peak traffic jump 7% quarter-over-quarter and 28% year-over-year to greater than 29 terabits per second, driven by FIFA World Cup streaming demand and reflecting the continued strategic importance of having the world's largest Internet Exchange footprint on platform Equinix. Key interconnection wins this quarter included one of Korea's largest conglomerates, establishing interconnection in Seoul for SJC2, the Southeast Asia-Japan cable, which will be ready for service this year, and the largest water authority in the Netherlands, implementing Equinix Fabric to directly and securely connect to distributed infrastructure and digital ecosystems to ensure a clean water supply. Turning to our digital services portfolio, we saw continued momentum with Equinix Metal and Network Edge, driving attractive pull-through to Fabric. Digital services wins this quarter included a leading insurance and financial services company evolving their internal systems from their own data center to a public cloud plus metal approach at Equinix. And a Belgian advertising service provider using Equinix Metal for fast, efficient, and reliable data movement to support localized online advertising. And our channel program delivered its seventh consecutive record quarter, accounting for nearly 40% 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 continued strength from partners like AT&T, Avant, Cisco, HPE, and Microsoft. Key wins included delivering a critical time-sensitive site migration for a multinational banking and financial services client in partnership with Options IT and Dell. leveraging a combination of Equinix Metal, Network Edge, and Fabric to overcome supply chain delays and ensure continuity of operations while interconnecting to critical trading platforms. So let me turn the call over to Keith and cover the results from the court.