Equinix, Inc.

Thank you all for standing by. Welcome to the Equinix first quarter earnings conference call. All lines will be able to listen only until we open for questions. Also, today's call is being recorded. If anyone has any objections, please disconnect at this time. I would now like to turn the call over to Chip Newcomb, Senior Director of Investor Relations. Thank you. 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 that 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 17, 2023. 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's 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 Investor Relations page at www.equinix.com. We've 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 sell-side analysts. In the interest of wrapping this call up in one hour, we'd 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 first quarter earnings call. We had a strong start to the year, delivering quarterly revenues right at $2 billion, with adjusted EBITDA and AFFO above the top end of our expectations. Despite a challenging macro environment, customers remain committed to their digital transformation journeys, driving 4,000 deals in the quarter across more than 3,000 customers, highlighting the scale and diversity of our go-to-market engine and the broad-based demand that continues to propel the business. We continue to see enterprises and service providers build out their IT infrastructure on platform Equinix, and that infrastructure is more distributed, more cloud-connected, and more hybrid than ever before. And while some customers are appropriately cautious about the timing of their investments given macro conditions, Equinix continues to be a critical partner in their efforts to advance hybrid architectures, unlock digital performance gains, and optimize cloud and network spend. As a result, our deal win rates remain steady compared to historical trends, and we continue to see a robust pricing environment across all three regions. Turning to power, we're very pleased with how the organization has navigated a volatile energy market, and we remain in a strong position, significantly mitigating the impacts of this volatility for our business and for our customers. As previously discussed, we raised pricing in January to more than 7,000 customers across 16 countries, generating approximately $90 million of incremental revenue in the quarter, fully offsetting the impact of higher power costs. Thanks to timely and transparent communications, concessions and disputes are low, and our days of sales outstanding remain in line with historical trends. On the sustainability front, we are committed to responsible growth and continue to advance our bold future-first sustainability agenda. Sustainability is increasingly becoming a board-level issue. And Gardner estimates that by 2026, 75% of organizations will seek to increase business with IT vendors that have demonstrable sustainability goals and timelines, and will seek to replace those who don't. We recently published our eighth annual CSR report, and in 2022, we extended our industry leadership with 96% renewable energy coverage, making our fifth consecutive year with over 90% coverage. We're also progressing well on our science-based targets with a 23% reduction in operational emissions across Scope 1 and Scope 2 from our 2019 baseline. Additionally, Equinix continues to evolve its power procurement portfolio to increase the quality of its renewable energy purchases. This year we signed new long-term power purchase agreements for solar projects in Spain, totaling 345 megawatts of capacity. bringing Equinix's contracted renewable energy PPA portfolio to 715 megawatts globally once fully operational. Looking forward, where feasible, we'll continue to prioritize projects that create new sources of clean energy directly in the grids where we operate and support a healthy renewable energy coverage mix. Turning to our results as depicted on slide three, revenues for Q1 were $2 billion, up 16% year-over-year, driven by strong recurring revenue growth. Adjusted EBITDA was up 18% year-over-year, and AFFO was better than our expectations due to strong operating performance. These growth rates are all on a normalized and constant currency basis. Our unmatched scale and reach continues to differentiate our data center services portfolio, and the tremendous strength of our balance sheet positions us to sustain our investment in new capacity to support a robust demand environment. We currently have 50 major projects underway across 37 metros in 25 countries, including 10 X-scale projects that will deliver more than 90 megawatts of capacity once opened. This quarter, we added new data center builds in Lagos, Frankfurt, and Rio de Janeiro. Revenues from multi-region and three-region customers increased 1% quarter-over-quarter to an impressive 76% and 65%, respectively. Key multi-region wins in the quarter included a Fortune 500 manufacturing conglomerate expanding its performance hub deployments across all three regions to assist with business unit divestiture, and a cloud-native zero-trust cybersecurity company using Equinix Metal to expand its business across all three regions. Our platform remains the logical point of nexus for hybrid and multi-cloud deployments, and hyperscalers continue to look to Equinix as a critical infrastructure provider and a valued go-to-market partner. This quarter, we won five new cloud on-ramps across Melbourne, Mumbai, Muscat, Tokyo, and Warsaw, as we continue to enjoy a strong leadership position in multi-cloud connectivity compared to our closest competitors. We're also seeing the unique breadth of our product portfolio across retail colo, interconnection services, X-scale, and digital services resonate strongly with customers as they embrace rapidly emerging opportunities in AI. We've closed several key AI wins over the past few quarters and are seeing a growing pipeline of new opportunities directly and with key partners for both training and inference use cases that benefit from the unique performance characteristics and multi-cloud proximity of our platform. In our X-scale portfolio, we continue to see strong overall demand. In Q1, we pre-leased our entire Frankfurt 16 asset, representing 14 megawatts of capacity, taking us to over 75% leased or pre-leased across our nearly 260 megawatts of operational and announced X-scale facilities. And we have a strong funnel of additional X-scale opportunities in the coming quarters. Enterprise to CloudWinds this quarter included a leading consumer products company leveraging Equinix's robust ecosystems for their private multi-cloud connectivity needs. And the Hearst Corporation, a diversified media company deploying on-platform Equinix to execute its cloud-first strategy, including the deployment of Network Edge for their network aggregation. Turning to our industry-leading interconnection business, we now have over 452,000 total interconnections on our platform. In Q1, interconnection revenues stepped up 12% year-over-year on a normalized and constant currency basis, and we added an incremental 5,300 interconnections for the quarter. We saw some continued grooving activity and consolidation into higher bandwidth VCs on fabric, but both moderated from the prior quarter. While gross ads remain strong, pricing is firm, and the diversity of our customer interconnection continues to expand. As global data volumes continue to accelerate, Internet Exchange saw peak traffic up 3% quarter-over-quarter and 26% year-over-year to greater than 30 terabits per second for the first time. And as enterprises continue to embrace hybrid and multi-cloud as their architecture of choice, they are increasingly seeking the security, performance, and convenience of Equinix Fabric to connect to their choice of cloud and IT services across the broader digital ecosystem. One example is Cisco, whose multiple edge-delivered services now rank among the leading end destinations on Fabric. Customer wins included Caixa, Brazil's federal financial services company, partnering with Equinix to accelerate its business by optimizing and securing its network core via Fabric. We also continue to enhance our platform with our digital services portfolio and saw strong new user growth for our Equinix metal offering as we cultivate product-led growth. WINS this quarter included a Japanese video game company utilizing Equinix Metal in all three regions to support a new product launch and Restack, an Australian SaaS integrator and managed services provider, utilizing Equinix Fabric and our Edge services to optimize their solution offerings. Our channel program delivered another strong quarter, accounting for roughly 35% of bookings and 60% of new logos. WINS were across a wide range of industry verticals and digital first use cases, with strong engagement across the hyperscalers and continued momentum with partners like AT&T, Dell, Cisco, HPE, Orange Business, and Zenlayer. Key wins included a digital modernization win with Intel, our largest local partner in Chile, on behalf of Empresa Nacional de Petróleo, a Chilean oil and gas company. Intel is delivering a fully managed SD-WAN solution based upon Cisco technology while leveraging Equinix data center and interconnection services. demonstrating how local partners can help deliver value to clients in new Equinix markets. Now, let me turn the call over to Keith and cover the results for the quarter.