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Operator
Operator
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, Senior Director of Investor Relations. Thank you. You may begin.
Chip Newcomb
Senior Director of Investor Relations
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 16, 2024, and our most recent Form 10-Q. 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 to 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 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 webpage from time to time, and encourage you to check our website regularly for the most current available information. With us today are Adair Fox-Martin, Equinix's CEO and President, and Keith Taylor, Chief Financial Officer. Following our prepared remarks, we will be taking questions from Southside 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 it over to Adair.
Adair Fox-Martin
CEO and President
Thank you, Chip. Good afternoon and welcome to our second quarter earnings call. I'm honored to be hosting my first earnings call today as CEO and president of Equinix. I'm immensely proud to lead our dedicated team of more than 13,000 employees around the world. I would like to express my gratitude to Charles and the entire Equinix team for the warm welcome and the facilitation of a smooth transition over the past two months. I look forward to the continued partnership with Charles in his role as executive chairman, and I'm excited and optimistic about the road ahead. As a board member for the past four years, I've witnessed many of the unique qualities that have driven Equinix's durable success. Our 25 years of investment has built a business now spanning 264 data centers in 72 metros across six continents. Our focus on customer value and outcomes has created interconnected digital ecosystems unrivaled in our industry. It is a phenomenal foundation to build upon as CEO. As the stewards of some of the most important digital infrastructure in the world, we are exceptionally and uniquely positioned to capitalize on the immense opportunities that lie ahead. Business transformation remains a critical priority for our customers, and the emergence of AI marks a pivotal point for our industry. AI, similar to the growth of cloud technologies a decade ago, will take time to fully develop. In the near term, AI training workloads are driving significant demand, particularly from service providers. Our XScale program continues to be a direct beneficiary of this demand. We intend to build on this momentum, meaningfully augmenting and extending our X-scale portfolio, particularly in North America. This will complement our robust portfolio across Europe and Asia Pacific. We are excited to share that we recently closed on land and power for our first multi-hundred megawatt X-scale campus in Atlanta. We look forward to announcing details of this project and our next XScale joint venture in the coming months. At the operational end of the AI spectrum are network nodes and inference workloads. As with cloud, Equinix continues to be the preferred location for network nodes as customers seek the right connectivity solutions for data ingestion and distribution. We also see inference demand beginning to take shape. We believe the implementation and deployment of these workloads will accelerate over the coming years. The neutrality, global reach, and scale of Platform Equinix can deliver the performance, network density, and cloud adjacency which inference workloads will require. We are already seeing significant enterprise and service provider interest in our deployment capabilities. In Q2, We partnered with WWT to serve Almabic Technologies, an AI-powered marketing analytics platform for enterprise. Almabic Technologies deployed their AI infrastructure at Equinix to run proprietary inference algorithms on massive datasets for predictable cost, privacy, speed, and secure access to data sources in the cloud. InstaDeep, a leading provider of AI decision-making solutions, deployed a NVIDIA AI cluster at our Paris 10 asset to access key ecosystems, optimize their network, and support their growth objectives. Our approach to the market opportunity created by AI is multifaceted, and we believe it will deliver value in the short term and sustainable growth over the medium to long term. Our X-scale offering provides the infrastructure and expertise required for massive, scalable data center operations for our cloud and large-scale technology customers. For our enterprise and mid-market customers, we offer AI-ready data centers and turnkey solutions, enabling them to scale efficiently and effectively as they introduce AI technologies into their business operations. For those who require high performance inferencing, our edge solutions handle the data at the edge where it is generated, ensuring optimal performance for the next generation of business applications. Over the past two months, I have embarked on a listening tour across a number of our locations, meeting with our customers, partners, and employees. And whilst it is still early in my tenure and there is still work that I need to complete, I have noted some areas of opportunity that will underpin our strategy for the company going forward. The opportunity to simplify across numerous aspects of our business. This will allow us to accelerate our pace of execution. The opportunity to drive more focus. Whilst we may do less, the programs of work that we focus on will represent excellence in execution and deliver the highest quality outcomes. The opportunity to amplify our go-to-market efforts, to delight our customers and energize our partners. Equinix has consistently demonstrated discipline and execution. This mantra of discipline allows us to deliver market-leading returns on capital and serves as the underlying fuel for long-term growth in AFFO per share, our core financial metric. Building on this foundation and executing on the opportunities I noted should create a simpler, more focused, and ultimately higher valued company. With all of this in mind, I'll turn to our Q2 performance. Equinix had a great second quarter. We delivered record growth bookings. Our pricing remains strong. We continue to invest broadly across our offerings to further enhance the scale and reach of our industry-leading platform. Our delivery of adjusted EBITDA and AFSO per share continues to run ahead of expectations. As you can see on slide three, Q2 revenues were 2.2 billion, up 8% over the same quarter last year. This represents our 86th consecutive quarter of top line growth. Adjusted EBITDA was up 17% year over year, with strong AFFO per share flow through. Interconnection revenues stepped up to 9% year over year. These growth rates are all on a normalized and constant currency basis. In May, we announced the opening of our first data center in Johor with strong interest from customers across our new Malaysian footprint. In July, we announced our expansion into the Philippines through the planned acquisition of three data centers in Manila from Total Information Management. This transaction, valued at approximately $180 million, is expected to close in the fourth quarter of 2024, adding more than 1,000 cabinets of capacity in addition to land for future development. The combination of our strong leadership position in our Singapore hub and our entries into Malaysia, Indonesia, and the Philippines strategically position Equinix to help our customers capitalize on the expanding digital opportunity in the fast-growing Southeast Asia region. Customers taking advantage of our expanding global footprint include First Digital, an internet and telecommunications provider. First Digital is significantly lowering total cost of ownership by building a multi-cloud network with Equinix Fabrics Cloud Router to connect to Cisco Webex and AWS across all three regions. Our global interconnection franchise continues to perform, with over 472,000 total interconnections now deployed. Growth interconnection additions were at the highest level in two years, and pricing continues to trend favorably. However, net interconnection ads were 3,900 due to grooming activity primarily in our content and networking verticals. We do expect this grooming to lessen over time. Equinix fabric growth was underpinned by 100 gigabit port additions and strong pull-through from other digital services products. Network Edge experienced continued rapid growth with an expansion activity from existing customers. Key recent interconnection and ecosystem wins include Nuum Exchange. This is a new company formed after the integration of the Santiago, Lima, and Columbia stock exchanges. Capital market participants can now benefit from Nuum's extended reach, low latency, and secure connectivity. supported by Equinix and key markets like New York and Sao Paulo. Our channel program delivered another solid quarter, accounting for over 30% of new bookings and 55% of company new logos. We continued to see growth from partners like AT&T, Avant, Dell, HPE, and Orange Business, with wins across a wide range of industry segments and use cases. Notable wins included an AI as a service solution via our distribution partner, TechData, and MSP partner, Asiapack. Leveraging a combination of co-location and Equinix fabric, our partners are delivering an LLM for a high-level learning institution based in Malaysia. Now, before I turn the call over to Keith, I wanted to recognize that we believe we are in a position of strength financially, from both a balance sheet and from an access to capital perspective. Our investment strategy delivers a strong return on invested capital, all of which gives us the flexibility to execute our go-forward strategy. With that, I'll turn it over to Keith to cover the results from the quarter.
Keith Taylor
Chief Financial Officer
Great. Thanks, Sudhir. Now let me first say I look forward to the next phase of the Equinix journey alongside you and know it's going to be a very exciting time for all of us at Equinix. And also good afternoon to all those that are on the call today or who might be listening later. So to start, we had a great second quarter as the team continued to execute against our plans. We had record gross bookings, closing more than 4,000 deals with more than 3,000 customers. We continued our trend of net positive pricing actions. and we ended the quarter with solid net bookings. Our forward-looking pipeline remains deep, which we expect will drive momentum in the second half of the year, and we're delivering profitability ahead of our expectations. As a result, we're again raising our full-year adjusted EBITDA and AFFO guidance, and therefore AFFO for Share 2, our lighthouse metric. Also, as Adair highlighted, I'm excited about the next phase of our X-scale initiative. We plan to lean into this program as we've seen strong demand for this offering as evidenced by both our cloud and AI bookings momentum. We continue to believe this off balance sheet JV structure with our equity partners is the right model to pursue this significant opportunity, which also drives durable value on a per share basis. To date through the X scale JVs, we've invested about 4.7 billion in the program. Since our last earnings call, we leased an incremental 17 megawatts of capacity and a Silicon Valley 12 and Paris 13 assets. This brings our total global X scale leasing to 365 megawatts, representing nearly $6 billion of total contract value and more than $700 million of annualized revenue once these assets are fully ramped. Looking forward, we have a strong funnel of additional X scale opportunities. and we look forward to updating you on our future JV partnerships in the near term. For non-financial metrics, MR per cabinet is rising, increasing 7% year-over-year on a normalized and constant currency basis to $2,287 per cabinet, driven by favorable pricing environments, solid interconnection attach rates, and increasing power densities. As discussed on our last earnings call, as expected, we saw continued pressure on our unadjusted net cabinet spending metric due to capacity constraints in certain key markets, increasing power density, and timing of churn. StackPath unexpectedly announced their immediate liquidation in June, resulting in 300 cabinets churning a quarter end, as an example. Related to cabinet density, the Q2 cabinets churned were at an average density of 4 kilowatts per cabinet. while the new cabinets booked were an average density of 5.9 kilowatts per cabinet. In Q2, non-X scale, net megawatts sold increased meaningfully compared to the prior six quarters. As we look forward, given our strong gross bookings, and as a result, the rising backlog of cabinets sold but not yet installed, we expect billable cabinets to improve in the second half of the year. On the sustainability front, We're continuing to advance our bold Future First agenda, implementing innovative ways to integrate into the communities in which we operate. This includes new heat export programs across Europe and the Americas, including our new Paris 10 IBX, which helps heat a portion of the Aquatic Centre at the Paris Olympics. This is one example of a sustainability initiative that we believe will become commonplace in the markets we serve in the future. Now let me cover the highlights from the quarter. know that all growth rates in this section are on a normalized and constant currency basis. As depicted on slide 4, global Q2 revenues were $2.159 billion, up 8% over the same quarter last year, and in the upper half of our guidance range on a constant currency basis, including the impact of a one-off charge against recurring revenues. As expected, non-recurring revenues stepped up sequentially due to strong XCO leasing activity in the quarter. Q2 revenues net of our FX hedges included a $6 million headwind when compared to our prior guidance rates due to the weaker Brazilian real and the Japanese yen in the quarter. Global Q2 adjusted EBITDA was $1.036 billion or 48% of revenues, up 17% over the same quarter last year and above the $1 billion quarterly threshold for the very first time. Relative to our expectations, adjusted EBITDA was at the top end of our guidance range due to strong operating profits and timing of spend. Due to adjusted EBITDA, net of our FX hedges included a $3 million FX headwind when compared to our prior guidance rates and $4 million of integration costs. Global Q2 FFO was $877 million, up 17% over the same quarter last year, better than our expectations due to strong operating performance and the timing of the land lease payment related to our upcoming Singapore 6 build. Q2 AFFO included a $3 million FX headwind when compared to our prior guidance rates. Global Q2 MR churn was 2.3%. For the balance of the year, we expect MR churn to remain in the 2% to 2.5% quarterly guidance range. Turning to our regional highlights, the results which are covered on slides 5 through 7. On a year-over-year normalized basis, APAC was our fastest-growing region at 11%, followed by the Americas and EMEA regions growing at 9% and 5%, respectively. The Americas region had a great quarter with record gross bookings led by strong financial services activity, firm pricing, and a higher mix of medium and large footprint deals. We saw particular strength in our Tier 1 markets, including Dallas, New York, Washington, D.C., Our EMEA business delivered a solid quarter with healthy bookings activity and strong pricing. The team did an excellent job selling our global platform with record exports and strong intra-region activity, including into our growth and emerging markets, such as Abu Dhabi, Istanbul, and Warsaw. And finally, the Asia Pacific region had a strong quarter with momentum in our largest markets in the region, including Hong Kong, Singapore, and Tokyo. as well as strong customer interest in our new ASEAN metros. Encouragingly, we saw strong intra-region activity driven by customers deploying AI workloads in both Japan and Malaysia. And now looking at our capital structure, please refer to slide eight. Our balance sheet increased to approximately $33 billion, including an unrestricted cash balance of $2 billion. Our cash balance increased quarter-by-quarter due to strong operating cash flow, and the debt raised in the quarter, offset by our growth investment and the cash dividend. In May, we raised 750 million of senior US dollar notes due in 2034, and we immediately swapped these notes into Euros at an effective interest rate of 3.9%. Our net leverage remains low relative to our peers at 3.5 times our annualized adjusted EBITDA. Our blended debt borrowing rate is now 2.4%, the lowest in our industry. As noted previously, given the global nature of our business, we plan to opportunistically raise additional debt capital in low-rate markets where we intend to expand, creating both incremental debt capital to fund our growth, but also placing a natural hedge into these markets. Turning to slide nine for the quarter, capital expenditures were $648 million. including recurring capex of 45 million. We continue to invest across our platform with 54 major projects currently underway in 36 markets in 24 countries, including 15 X scale projects. Since our last earnings call, we opened 10 projects across eight metros, including new data centers in Johor, Osaka, Silicon Valley, and Warsaw. We also purchased our Helsinki 5 and Madrid 2 assets and land for development in Atlanta, Dallas and Milan. Revenues from owned assets increased to 69% of our recurring revenues and more than 80% of our current retail expansion will be on our own land or owned buildings with long-term ground leases. Our capital investments deliver strong returns as shown on slide 10. 180 stabilized assets increased recurring revenues by 4% year-over-year on a constant currency basis. Stabilized assets were collectively 83% utilized and generated a 26% cash-on-cash return on the gross PPE invested. And finally, please refer to slides 11 through 15 for our updated summary of 2024 guidance and bridges. Do note all growth rates are on a normalized and constant currency basis. For the full year 2024, we're maintaining our underlying revenue outlook with expected top line growth of 7% to 8%. This reflects our solid execution in the first half of the year and a strong pipeline to drive momentum in the second half of the year. We're raising our underlying 2024 adjusted EBITDA guidance by another $15 million through the strong operating performance and lower integration costs. We're raising our underlying 2024 AFFO guidance by $15 million an 11% to 13% increase over the previous year. FFO for shares is expected to grow between 9% and 11% at or above the top end of our long-term plan as we continue to compound value for our shareholders. And finally, 2024 CapEx is expected to range between $2.8 and $3.1 billion, including about $240 million of recurring CapEx. So let me stop here. I will turn the call back to Adair.
Adair Fox-Martin
CEO and President
Thank you, Keith. In closing, we had a strong first half of 2024. We stand apart from our competitors by seamlessly integrating a global footprint with cutting-edge infrastructure. This allows us to effectively address the wide range of opportunities in the era of AI, from the training needs of the service providers to the business needs of our enterprise customers. It also positions us to continue to effectively address the broader set of demands of our customer base. We believe our unwavering commitment to discipline, simplicity and focus, combined with our amplified go-to-market efforts, will continue to drive growth and deliver higher value for our employees, customers, partners and shareholders. With that, I'll stop here and open it up to questions.
Operator
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 1 on your phone. If you would like to withdraw your question, you may press star 2. Our first question comes from Simon Flannery from Morgan Stanley. Please go ahead.
Simon Flannery
Analyst, Morgan Stanley
Great. Thank you. Good evening. Derek, congratulations on the new position, and thank you for the comments on your listening tour and where you see the opportunities. I'd love to get your high-level perspective on what led you to take the role at Equinix. Obviously, you'd known them from the board, but you came from Google. You'd worked at SAP before that. So you've got a great perspective on the cloud needs of the hyperscalers, the AI opportunities. So it'd be great if you could just put all of that into context on where you see Equinix being positioned for the training, but particularly for the inference wave of AI. Thank you.
Adair Fox-Martin
CEO and President
Thanks very much for the question, Simon, and thank you for the kind words. It's certainly been a whirlwind of 10 weeks since I formally took the position, and a lot that I've heard and understood during the listening and learning sessions. I have to say I remain exceptionally positive about the opportunity ahead. One of the reasons, or one of the main reasons, or one of the many reasons actually why I'm I took the role with Equinix is obviously understanding the strategy of the company and its unique position in the ecosystem. I believe that Equinix is uniquely positioned to offer a range of enabling services for our customers so that they can actually capitalize on the opportunities presented by various different technology platforms. When I think about our demands and the customer needs, it is actually much broader than the AI portfolio. Many of our customers have made a very significant commitment to hybrid and to multi-cloud. And as customers become more at ease with cloud as a technology paradigm, we can see many more workload-based decisions beginning to occur. So decisions about where particular workloads are best suited. As I look at this in the context of AI and the AI demand, that initial short-term demand is coming indeed from the service providers. And this is reflected in our X scale business and in the bookings performance that we've seen in the X scale business. And as you heard in our remarks, this is something that we're looking to expand globally. But many CIOs, like during the early days of cloud, are looking to ensure that they have an AI strategy. And we are beginning to see the beginnings of enterprise training and enterprise funnel as we look at customers looking to evolve their strategy into proof of concepts and beyond that into working production systems. As I said, I think retail will have a much broader demand and a more meaningful long-term upside from AI as these use cases move from proof of concepts into production. There is, of course, a lot that Equinix is offering to our customers here, both in our retail business and, of course, on the X-scale side of the house. And I think this unique, balanced approach to the opportunity, represented in the broader demand context, but also in the era of CloudEye, is something that's extremely exciting, and I'm looking forward to leading the company through this journey. Great.
Simon Flannery
Analyst, Morgan Stanley
Thanks for your thoughts.
Adair Fox-Martin
CEO and President
Thank you, Simon.
Operator
Operator
Next, we'll go to the line of Nick DelDeo from Moffitt Nathanson. Please go ahead.
Nick DelDeo
Analyst, Moffitt Nathanson
Hey, afternoon. Again, congratulations, Adair, on taking the helm. Adair, you had mentioned simplification focus and amplifying go-to-market as some of the areas that seemed interesting to you initially. I guess, can you expand a little bit on what you saw and things we might see on that front in the coming years?
Adair Fox-Martin
CEO and President
For sure. Thank you very much again for the congrats, Nick. I appreciate that. First of all, when I look at the overall approach that I will take, it is about creating value. And it will always have a customer lens, an outside-in perspective, ensuring that customer success translates and is equal to equity success in many regards. When I look at this, this means looking at how we continue to evolve the product portfolio, how we continue to drive critical partnerships so that we're at the center of the digital ecosystem, and how we continue to enhance and evolve our go-to-market engine. Let me specifically pick up on the notion of simplification. When one simplifies, you bring core processes back to their very core. This enables you to be agile in your response and helps you to accelerate the underpinning pace of the business. And whilst this list is not exhaustive, there are definitely a few areas that I see we have some opportunity to continue to involve and simplify. Things like our quote-to-cash process, elements like our customer lifecycle and ways that we can systematize and process the customer's journey with us throughout their lifecycle. And these type of enterprise grade processes will help us remove friction within the system and help deliver that pace, agility, and simplicity. When I look at it from a focus point of view, it is about understanding not just the footprint that's in our core, but how we continue to grow and evolve our core business to meet the needs of our customers. And this is both in our X scale business, but also on retail. where we look at how our global footprint enables customers to operate and transact in environments where they may not need to invest in the physical infrastructure themselves to do that. I also think that focus is an important point when we consider our digital services portfolio and look at this through the lens of where we have adjacency and augmenting some of that core functionality that we have that exists in the core footprint of the Equinix data center world. This is a point where we have the right to win, where customers would expect us to lead. And so for instance, I look at the underpinning growth in our fabric business, how important that can be as we look to continue to evolve our virtual interconnections portfolio. And this enables us to focus in perhaps on certain aspects of our product portfolio in order to ensure that we're investing where we can have the highest level returns. And on our go-to-market side, we have new leadership in our go-to-market team. I think it's a very important aspect of our business to underpin our go-to-market processes with a very clear segmentation strategy. that allows us to identify those customers that have the highest revenue perspective for us and to manage those customers in a high-touch environment, but likewise to enable us to extend our reach through channels and distribution effectively to customers who are in an SME, more general business type space. So I hope that's given you a little bit of amplification on simplicity, focus, and the actual augmentation of our go-to-market. Thank you for the question, Nick.
Nick DelDeo
Analyst, Moffitt Nathanson
Yeah, that was terrific detail. Thank you. Can I follow up with one on interconnection ads? Obviously, they drop quite a bit sequentially. I think you called out optimization and grooming and content and networking as drivers of that, but also noted strong ads. So maybe can you just expand a little bit on those puts and takes and how we should think about the path to getting interconnection ads back to a healthier and more sustainable level?
Adair Fox-Martin
CEO and President
Yeah. I'm happy to comment on that, and I can ask any of my colleagues here to add if there's anything that they would need to add to my commentary. So first of all, as we noted, we had 3,900 net ads. We had, as Keith mentioned in his comments, the StackPath liquidation, which impacted us negatively 400. And so without that, we would have had 4,300 ads. Now, let me just unpack some of the trends for you, Nick, to build on your question. First, on the positive side, when I look at the grossed ads, it's the highest level in two years. And year to date, this interconnection demand is actually back to peak pandemic levels. In absolute numbers, our A to Z connections continue to increase. And we've seen this quarter over quarter. And this is obviously the way that we define unique relationships between companies in a metro. And I think this really, truly speaks to the value of Equinix. So those things coupled together, the grossed ads, the absolute number of A to Z continuing to increase, the fact that we're at a peak pandemic levels, I think they're very good indicators of future momentum. Pricing is also trending very favorably. We have 11% spread between churns and new additions, and you see revenue up to 9% year-on-year on a normalized and constant currency basis. So a number of positives as we look at the interconnection lens. On the churn side, We saw the churn elevated in 23 and continued to worsen in early 24. And this was up especially in the EMEA theater of operation. I think networks have had the most toughest operating environment, and we're continuing to see pressure in that segment of our industry customers. I would also say that M&A affects this, where we have paid cross-connects but unpaid intra-company cross-connects. often replacing those in an M&A trajectory. And this takes some time for us to work through. But specifically, as it relates to EMEA, we can see that the data indicating some decelerating churn rate from the top 10 who have been churning in the past. So that again gives me the confidence to say that I can believe we'll move forward on a positive trajectory here. And this is an area of focus for me as we move forward over the course of this quarter.
Nick DelDeo
Analyst, Moffitt Nathanson
That's great. Thank you so much.
Operator
Operator
Next, we'll go to the line of David Barden from Bank of America. Please go ahead.
David Barden
Analyst, Bank of America
Hey, guys. Thank you so much for taking the questions, and Adair, welcome. I guess I have to be the one to ask. So, obviously, the DOJ SEC subpoenas continue to kind of be subject of conversation around the company, so I guess If you could kind of give us an update on where we are and what it will take to put that to bed, it would be great. Also, a follow-up on that is in the aftermath of the conclusion of the independent review conducted by the Board, were there any changes that you guys have made in this past quarter with respect to any kind of internal or external reporting? And then the last one, if I could, Keith, You referenced the unadjusted cabinets. I think this is the third or fourth quarter in a row we've had to talk about why cabinets aren't, in volume terms, living up to expectations. And it's because of the densities and better revenue per cabinet. Where are we on kind of coming up with some language that represents the adjustment that you think investors need to see when they read the release, you know, the first time around? Thanks.
Adair Fox-Martin
CEO and President
Okay, David, thank you very much for the words of welcome. Maybe we'll start with the cabinet growth scenario. We'll throw that to Keith, and then he can perhaps comment. on the investigation status.
Keith Taylor
Chief Financial Officer
Yeah, David, so first and foremost, look, we continue to see the net cabinet billings as an area of high focus. As I said, sort of in the prepared remarks, roughly 300 of those cabinets related to Stackpath, you know, that announced their liquidation at the end of the quarter. Put that aside, you know, there's a number of things that are impacting it. And one of them I'll refer to on why we say unadjusted. But capacity constraints, of course, continue to have an impact on basically the net cabinet's billing and then the timing of churn, which is an obvious statement. The increasing density continues to be a factor. And as we said, there's two things I wanted to pull out for you. And I said in the prepared remarks, but I wanted to make sure that it's understood and it's full of context. First and foremost, we had record gross bookings. So it gives you a sense that the volume in the businesses is there. So that gives me great confidence, and we had record gross bookings in the Americas Theatre more specifically. You add to that that we had the best net megawatts billing in the retail space. I'm not talking about X scale in retail. In the last seven quarters, so this is six quarters prior, we've done meaningfully better than we had done before. So it tells you about the health of the underlying business and really ties into what Adair was talking about on the sort of gross interconnects. So there's the volume there. But there's this element of the business both on how things are timing out. As you knew, we're sort of forecasting Q2 would be probably a negative quarter again. There's the timing of the churn. But when I talk about the unadjusted, we can do that math for you, which basically says, well, when you churn out a certain number of cabinets at that level of density and you apply different factors to them with a higher level of density, You're basically dealing with a whole of roughly 2,000 just because of density. And so that's why we say the unadjusted. I think the most important thing is that, look, we've given you a good sense of there's great momentum in the business. We're seeing great gross values. Yes, there's an element of churn that's coming through the business. We've been talking about that for many quarters now, the economic climate in which we operate. But overall, the depth of the pipeline and the momentum we see in our business, that's what gives us confidence that you're going to see that abate. And then the last part I would just say is the backlog has been as high as we've seen in a very long period of time and is substantial. Not a surprise, largely because we did more medium to larger size deals in the quarter. And when you do that, you have some level of extension in the book-to-bill interval. And therefore, the backlog does creep up as we work to configure those deployments and get them into implementation. So hopefully that answers that question. And let me then just go to the DOJ, which I think Adair was going to pass to me anyway. No surprise to you, we're continuing to work with the SEC and the DOJ. It's a process. We're working through that process. We continue to feel very confident in that process and how we're responding to it. I would like you to draw great comfort from the fact that not only did we file our 10Q last quarter, but today we filed our 10Q today. And so when you think about the reinforcement we got from the audit committee's investigation of our financials, you should draw great comfort from it. But like anything... With the short seller report as it comes out and the following subpoenas that came from the SEC and DOJ, we have to respond to it and therefore it is a process. In your question to was there anything that came out of what we want to do differently, I think it was very important when you look at what we announced in May, we were clear that not only did we not have any restatements, but we didn't have any adjustments. Restatements is a fact about materiality. adjustment is an adjustment. And so the system is working as it should, which is great. We have the controls, the team does the work, and overall we feel very confident about it. But like anything, you're always going to step back and reflect, are there other things that we could do that are different? And so that's why the team, they're looking at all the things that we do and saying, do we do different types of disclosures? You saw us recently talk about the redevelopment of our cap, you know, One was a very important disclosure. We had already been planning for it in advance of the short seller report. But those are the kind of things that we just make sure that there's appropriate augmentation of policy and disclosure, and I think it puts us in a much better position. But relating to is there any adjustments, the answer is no, but we always think that there's things we can do better. And I'm drawing from a line of one of my close CFO friends. He always says, better, better, never done. Because we're always looking to do better every single quarter, and we're never going to be done. So we'll take the advice and guidance from both the council and whether anything comes back from DOJ and SEC, and we'll get better. But overall, I feel very comfortable in our financial disclosures.
David Barden
Analyst, Bank of America
All right, guys. Thank you so much.
Keith Taylor
Chief Financial Officer
Thank you both.
Operator
Operator
Next, we'll go to the line of Jim Schneider from Goldman Sachs. Please go ahead.
Jim Schneider
Analyst, Goldman Sachs
Good afternoon. Thanks for taking my questions and welcome, Adair. I was wondering if you can maybe extend on your comments earlier about AI workloads moving from service providers to enterprise. Adair, from your vantage point, how long do you believe it will be before that AI demand becomes more directly material on the enterprise side to Equinix on the sort of conventional retail side?
Adair Fox-Martin
CEO and President
Yeah. Thanks very much, Jim, and thanks for your question and your words of welcome. And so I think, you know, in the short term, the demand that we're seeing is primarily for training-based work loads. And this is primarily driven in the short term by cloud and the various different technology partners that we have. And this, as I've mentioned, is how our near-term pipeline is being represented. And the beneficiary of this in many instances is our X-scale business. In the enterprise mid-market retail business, we absolutely have AI-ready data centers ready to take customer workloads. We have already closed a number of transactions where we are running smaller AI-based workload scenarios in the training world for enterprise-based customers. We are working with many of our CIOs to support their AI strategy as they look to integrate AI into their business and manage their cost whilst they're doing so. And of course, some of our ecosystem partners have created almost a magnetism around Equinix as it relates to AI. Companies like CoreWeave and Lambda that we announced last year in 23, who have capabilities available today in Equinix data centers, and, of course, the NVIDIA DGX private cloud offering that we also announced late in 23. All of these have very active work pipelines, Some of them have active users who are making use of this system now. So I'd say that we're seeing early traction in, you know, the enterprise-level inference and type workloads beginning to occur in our data center environment. But that is something that we'll see extrapolate and grow over the medium to longer term.
Jim Schneider
Analyst, Goldman Sachs
Thanks. And then... As a follow-up, last quarter you outlined your plans for your DC-1 data center to both modernize and expand capacity. As you look across your portfolio, do you foresee the opportunity to do this more broadly across more facilities?
Keith Taylor
Chief Financial Officer
Yeah, I think, Jim, you're referring to our DC-2 redevelopment, if I'm not mistaken.
Jim Schneider
Analyst, Goldman Sachs
DC-2, excuse me.
Keith Taylor
Chief Financial Officer
Yeah, I just want to make sure. We think the universe of what we call redevelopment projects like that is five to seven-ish. They're strategic, they're of scale, they're of size and of great importance. And hence, we're doing those types of redevelopments because of the value that we get to create, introduce more capacity into that highly connected data center and get a good return, not only a good return on both the element of it, which is redevelopment, but also the enhancement aspect of it. And so overall, the universe isn't massive. You know, we have 264 data centers, as Adair alluded to. We think it's five to seven strategic assets strewn throughout the world that will do that, too.
Jim Schneider
Analyst, Goldman Sachs
Thank you.
Operator
Operator
Next, we'll go to the line of Michael Elias from TD Cowan. Please go ahead.
Michael Elias
Analyst, TD Cowan
Great. Thanks for taking the questions, and Adair, congratulations on taking the helm. Maybe to kick things off, one of the things that we've noticed is the differential in densities between what's being churned and what's coming in. As I think through the evolution at the chip level, it seems like there's an acceleration in power consumption there. Do you view this as a structural trend, i.e., we could be talking about four or five quarters from now, you taking in cabinets at 7kW per cab and churning at four, thus this represents an increasing headwind to that cabinet number? I guess that's my first question, just trying to get a sense around is this going to become a greater and greater headwind?
Adair Fox-Martin
CEO and President
You know, 10 weeks in, so this is certainly one of the areas that I've done a little bit of a double click on here. And I can certainly see that there are absolutely some shifting dynamics in the business. And Keith highlighted this increasing power density in the cabs that are churning in versus, as you pointed, those that are churning out. And for us, perhaps this is something where we would look to see the billable cabs as a measure, maybe not being as tightly tied to revenue growth as we've seen it in the past. And that's something that I think we're reflecting on. You know, if I think about our X scale business, kilowatts probably is a cleaner metric. But when I think about it from retail, our MRR per cab and our billable cabs, you know, That perhaps is the right P times Q map that we have now, even though growth is probably more weighted towards the cabinet yield versus the cabinet count at this point. And I think that we can continue to supplement that with quarterly insights into how we're seeing the density evolve as our business evolves and as the capabilities within our data centres continue to evolve. So certainly something that's a thought process for us here. I think as Keith mentioned, just to reiterate, I think those very strong gross bookings plus the leading indicator of cabinets sold not yet installed are indicators that we will improve on this number in the second half.
Keith Taylor
Chief Financial Officer
And maybe, Michael, if I can just add on to what Adair said. I think it's important, as Adair said, look, we've got to keep on looking at it. David asked the question earlier on. We want to be able to respond to it in a way that absolutely makes sense and give you all the statistics at least so you can have the same sort of view that we have. Clearly, the shifting dynamics is more density. So that's a positive. But I think what's really, you know, the crux of what is going to come here, if you have more density, your price per unit is going up, and you're seeing that in the ARPU or the MR per cabinet. But we're also, when we look to monetize the capital that we invest in the business, no surprise to you, we're looking at a return on that investment. Those targeted IRRs are 20% to 30%, you know, pre-leveraged. And so you're seeing the cash on cash yields still deliver, but that one core metric really feels like it's, again, something that I think makes sense to keep on tracking But we're really going to have to give you other components so that you get the full value of what's going on in the business. But the underlying bias is more density. And that's how, you know, we're a retail, you know, multi-tenant data center player. And you need to deal with, you know, the changing shifts in customer expectations. And that... You know, when you go into one of our data centers, you get a real good feel for the true difference between somebody maybe in one aisle versus somebody in a different aisle. And that tells you, like, there are shifting dynamics taking place in a really live environment, and it is an ecosystem that thrives with a propensity to increase density.
Michael Elias
Analyst, TD Cowan
Great. Thanks for the call there. And if I could just squeeze one more in. I believe the expectation at the beginning of the year was for churn to step down in the back half. Is that still your expectation? And maybe as part of that, could you give us a sense for the churn that you're seeing among medium and small size deployments? Thanks.
Adair Fox-Martin
CEO and President
Yep, I'll comment on this and then perhaps, Keith, feel free to add. I mean, certainly we're seeing that, you know, our churn in the range of 2% to 2.5%, which is the range that we guided to, is something that we can continue to manage to. I think that if we normalised for stack path in this quarter, we would have been slightly better than our expectations in terms of where we landed. We also have, you know, a supply and demand situation in the market, which has, you know, a very positive trajectory on pricing. So maybe, you know, this gives us the opportunity to be thoughtful about managing our overall churn and dynamic so that we could. selectively use proactive churn to help us drive and improve some yields here. I see that some of the challenges that we had in the first half will still exist at the macro level. There's certainly this need for customers across all industry segments to do more with less. Optimization is still something that customers are looking to do because it does give them, you know, that outcome on the more with less tangent. And we definitely have a number of our customers, you know, who are in a tougher environment in terms of the industry that they're operating in and the dynamics of that industry. That being said, we see that we will be managing within our full year as per the guide to the ranges that we set. And then I guess just from, you know, a thought process, you know, incoming to this, In the world of cloud, this is quite a usual process. I think that there is an opportunity for us to look at some enhancements in terms of management and proactive management early on of our customer engagement with us as it relates to their use profile and intention to churn. And so I think there is a potential for us to lean in and support our customers as they optimize and to engage in you know, churn-type discussions much earlier in the process than we've been doing thus far.
Keith Taylor
Chief Financial Officer
Michael, maybe I'll just add on one thing, one additional thing, given Adair's comment. The second half of the year, the pipeline is deep. The underlying expectation really is to see our gross booking activity continuing to go up. We expect churn is going to be consistent with how we've previously guided, which is important. And then in the fourth quarter, we've already sort of telegraphed. We're working with one customer in Singapore that is coming in size. We're working with them to vacate the premises. We will update you on that by the time we get to the back end of the third quarter, so on the October call. But that's the one area that is a planful churn. It was built into our guide. And as I said, it should happen by the end of the year. And that gives us back some very valuable capacity in Singapore. that we would like to have put to our use. Our Singapore 6 asset isn't going to be available until probably sometime in late 26, I would think, by the time it's up and running.
Michael Elias
Analyst, TD Cowan
Great. Thanks for the call.
Operator
Operator
Next, we'll go to the line of Michael Rollins from Citi. Please go ahead.
Michael Rollins
Analyst, Citi
Thanks, and good afternoon. Adair, congratulations on the new role. I'd like to get your thoughts on the addressable market for your retail data center services, maybe in a slightly different way. So the presentation deck cites that you have about 2,000 networks, over 4,800 enterprises, and I think about 3,000 cloud and IT service providers. And when you look at the opportunity for future revenue growth, curious how much more room do you have to grow the customers in each of these verticals relative to the opportunity to increase the spend from the customers that you have. And then just to follow up, if I could as well, Keith, just following up some of your comments about second half influences. When we take a look at the constant currency normalized ex-PPI revenue growth for the last two quarters, it seems like the first half average was roughly 8%. which is at the high end of the 7% to 8% target for the year. And then you made comments, I think, a few times now on the gross bookings environment, the pipeline. So can you share a bit more of what's happening in the back half of the year that's leaving the annual range at that 7% to 8%? Thanks.
Adair Fox-Martin
CEO and President
You want to take that first, Pete? Yeah, sure.
Keith Taylor
Chief Financial Officer
I'll do the first one then.
Adair Fox-Martin
CEO and President
Yeah, I take first or you go first?
Keith Taylor
Chief Financial Officer
Why don't I take it? Let me take the second half of the year first, Michael, if I may. Look, it's not lost on you, and I'm sure all the other listeners, that the business is performing well. The one thing that has been persistent is, although we're comfortable with the range of churn, our ability to guide it has been persistently high, and we had a tough fourth quarter in 2023, and that translates into momentum into 2024. That all said, when you look at this particular quarter, 2159, there's an element of quarter-to-quarter currency movement. We've given you all those numbers. I won't repeat them. We also felt the drag related to energy. As you know, we're going through power price decreases. Then we had this one-off large charge to our recurring revenues that we booked in the quarter. To size it for you, it's roughly $7 million. And so there's a number of things that sort of have affected the, you know, the sequential movement quarter over quarter. And that's on the recurring side of it. there's great variability in the non-recurring. We'll do our best to guide you each quarter on what's going on. Suffice it to say, the success in the X scale business has created some volatility with non-recurring, and we'll reconcile that and normalize it out for next year as well, just so you can truly get the sense of how the underlying business is performing. So all that said, We said that churn would slow down in the second half of the year and our bookings would accelerate. The pipeline is at the highest level we have ever seen in our business. So that's good. Churn we have, I think, good visibility to. And as a result, that's the momentum you're seeing that you should see in the business. And so we continue to remain confident. And as Adair said, Despite the macroeconomic conditions, we know they're tough out there. Companies like Stackpath, when they hit the wall basically at full speed and just liquidate, it gives you a sense that some companies aren't doing well out there. But you've got an evolving economic environment. We know our relevance. We know the digital environment is very friendly to Equinix, and we know the supply environment is going to continue to get more constrained. So the combination of all of that continues to give us the optimism that we have, not only in how we exit year, but also how we position ourselves for 2025. Again, you know what our lighthouse metric is, is driving value on a per share basis. That is our whole intention. But we believe we can do that with both good fiscal management and top line growth. So hopefully that gives you the answer that you're looking for.
Adair Fox-Martin
CEO and President
And perhaps just building on that and to address the first part of the question around the opportunity in our install base and new market opportunities, this is something that I feel very, very positive about. Not only have we undertaken and already commenced a very deep refresh of our segmentation of our customer base, but in the context of that, we have looked at each of those elements and how we can create sales play scenarios that allow us to have almost like a rinse and repeat model from a selling perspective into a cohort of customers. So very excited about the upsell opportunity as a result of some of those programs in our install base, but also about the outcomes of the segmentation exercises and the way that we will define our coverage model to enable us to reach further to prospects and bring them into the Equinix family as customers. So a piece of work that's underway, and I'm very confident about the prognosis and outcome of that work.
Chip Newcomb
Senior Director of Investor Relations
Thank you, everyone, for joining our call today. This concludes our Q2 call.
Operator
Operator
Thank you all for participating in the Equinix Second Quarter Earnings Conference Call. That concludes today's conference. Please disconnect at this time and have a great rest of your day.
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