Equinix, Inc.

Good afternoon and welcome to the Equinix Third 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, Senior Director of Investor Relations. You may begin.

Chip Newcomb 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, as well as 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. On today's conference call, we will provide non-GAAP measures. 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 of our website 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 sell-side analysts. In the interest of wrapping this 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 Adair.

Thank you, Chip. Good afternoon and welcome to our third quarter earnings call. We had an outstanding quarter. We delivered record growth bookings with strong performance across each of our three regions. We had solid deal conversion rates and pricing remained robust. Cabinet's billing increased meaningfully. All of this translated into our 87th quarter of consecutive revenue growth with attractive AFFO per share profitability highlighting the scale and differentiation that reinforces our market position. Importantly, given the robust demand for digital infrastructure to enable AI capabilities across industries and regions, our forward-looking pipeline remains strong, with healthy pre-sales activities supporting our momentum in Q4 and beyond. Turning to our strategy, as I discussed last quarter, Equinix has developed a differentiated and successful business over the last two and a half decades, creating exceptional value for our customers and our shareholders. Our strength is underpinned by our position as the world's leading digital infrastructure company, our truly global footprint and scale, our neutrality, and our singular value proposition around interconnection. However, we recognize that our industry landscape is dynamic and increasingly complex. Customer requirements and data center designs are evolving rapidly. Energy constraints and long-term development cycles pose challenges to our industry's ability to serve customers effectively. Equinix is particularly well positioned to address these challenges as an industry leader, to seize the significant opportunities ahead and drive future growth. To this end, we will focus on three strategic areas built on the tenets I shared on last quarter's earnings call of clarity, simplicity, and focus. First, we will start outside in with our customers. We will focus on enhancing how we engage with our customers at every milestone in our relationship with them. Our goal is to be the partner of choice for our customers' most critical infrastructure workloads. To achieve this, We intend to evolve our go-to-market engine in a structured and coordinated manner to deliver a frictionless customer experience that is segment appropriate. We have already seen the benefit of solution and segment focus in our record Q3 growth bookings outcome. Second, we will deliver integrated solutions that make it easier for our customers and partners to deploy and consume solutions at Equinix. Our initial efforts will focus on developing smarter solutions that extend our core co-location and interconnection offerings. This is where we have the right to win and the right to lead. In support of this, we have brought together our data center services team and our digital services team into a single business area led by John Lin. Third, we have been innovating in data center design and our approach to data center construction. we are fortunate to have industry-leading procurement, design, and construction teams. We intend to build for the future and accelerate our development of differentiated campuses that support the broad range of our customers' needs. Essentially, this means moving from many smaller bills with phased capacity delivery to fewer, larger bills balancing location with access to power on campuses that can service the full range of our customers' needs, from SMEs to hyperscalers. At the same time, we will remain focused on delivering industry-leading investment returns by continuing to meet the evolving needs of our customers, placing the right application into the right footprint for the best business outcome. Taken together, I believe these strategic moves, which are about doing less so that we can deliver more, will drive significant long-term value for our customers, partners, and shareholders. We continue to invest in the market opportunities we believe lie ahead. Earlier this month, we announced our plans to nearly triple the investment capital of our X-scale program, with the agreement to form a greater than $15 billion joint venture with the CPP Investment Board and GIC. With the capital raised through this new JV, Equinix expects to build new state-of-the-art X-scale facilities on multiple campuses across the U.S., each with the capacity of multiple hundreds of megawatts. As discussed previously, we've already closed on land and power for a 240 megawatt X-scale campus in Atlanta, which we expect to contribute to this new JV. We are currently in active diligence to secure power and land in additional U.S. markets and look forward to providing more details in the coming quarters. Since our last earnings call in our established JVs, we have leased an incremental 20 megawatts in our SOL2 data center. This brings total X scale leasing to 385 megawatts globally. with nearly 90% of our operational and under-construction capacity leased. We believe Equinix is uniquely positioned to innovate with and for hyperscalers, and we are excited about the opportunities ahead. Enterprise demand is steadily building for AI-related workloads. We remain the preferred location for server provider on-ramps, supporting the data ingestion and distribution requirements of AI workloads. Equinix customers can enjoy low latency access to native hyperscaler on-ramps in 47 metros across 25 countries. This includes 12 metros with on-ramps to five or more providers. This is six times the coverage of our nearest competitor. Recent key service provider wins and production use cases include Nebius, a full-stack AI infrastructure provider. Their new deployment in Paris will be among the first in Europe to offer NVIDIA H200 Tensor Core GPUs in support of providing essential resources for customer AI journeys. Sakura Internet, a Japanese cloud service provider, is actively involved in the development of large-scale cloud services for generative AI and aims to enhance its GPU-based cloud services to explore new business opportunities in Asia. For enterprise AI, Equinix is supporting a Fortune 200 shipping and logistics company who deployed at Equinix to unlock predictive capabilities and logistics and build intelligent data-driven supply chains. We are also supporting a leading med tech company who is leveraging AI algorithms to analyze endoscopic images in real time. This will save lives through enhancing diagnostic precision. Our unique business model enables us to serve the full spectrum of our customers' AI requirements. Our retail footprint is well positioned to serve the inferencing and private AI workloads of enterprises of varying sizes. Our rapidly expanding X scale offering can meet the significant requirements of hyperscalers and service providers. Our ability to satisfy these needs fortifies our resilience in capturing upside and managing potential downside in a highly dynamic and evolving AI landscape. Turning to our results as depicted on slide three. Q3 revenues were 2.2 billion, up 7% over the same quarter last year, driven by strong recurring revenue growth and X scale fees. Adjusted EBITDA was up 12% year over year, with solid AFFO per share profitability. Interconnection revenues increased 10% year over year, with continued strength from Equinix Fabric. These growth rates are all on a normalized and constant currency basis. Fueling our industry-leading global interconnection franchise, we now have 478,000 total interconnections deployed across our footprint. Growth interconnection additions remain strong, and pricing continues to trend favorably. Net interconnection additions improved to 5,700 due to strong increase in hyperscaler cross-connects and the continued diversification of our ecosystems. Equinix Fabric saw continued solid growth and is now operating at an annual revenue run rate of greater than US$250 million, with an attach rate of approximately 40% across our global customer base. Our fabric business grew thanks to 100 gigabit port additions and higher bandwidth virtual connections. Equinix Internet Exchange saw peak traffic surpass 40 terabits per second for the first time. In August, we opened our first data center in Johannesburg to support the growing digital infrastructure and connectivity needs of enterprises and service providers in the rapidly growing African continent. We also opened the first phases of our New York 3 and Tokyo 15 IBXs this quarter, easing capacity constraints in two of our key metros. Customers taking advantage of our expanding global footprint include Pubmatic, a digital advertising firm who expanded their partnership with Equinix to leverage AI-powered predictive analytics for their ad campaigns. SaaS provider Zoho chose Equinix so they could better support their customers in complying with European data sovereignty requirements. Our channel program delivered another solid quarter, contributing approximately 50% of new logos. We continued to see growth from partners like Avant, DAO, Orange Business, and WWT, with wins across a wide range of industry segments and use cases, including AI. Few three wins include a data center modernization project with AT&T. Together, we helped a customer experience technology company blend cloud and private infrastructure resources, enable multi-cloud networking, and accelerate AI and automation enhancements for customer interactions. We believe this quarter is a testament to the trust our customers place in us and the value they realize from partnering strategically with us. With that, I'll turn it over to Keith to cover the quarter's financials.