Equinix, Inc.

Good afternoon and 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 conference is being recorded. If anyone has any objections, please disconnect at this time. I would now like to turn the call over to Mr. Ryan Burke, Vice President of Investor Relations. You may begin, sir.

Good afternoon and welcome to our first quarter conference call. Before we get started, I want to remind you that some of the statements that we make today are forward-looking in nature and involve certain risks and uncertainties. Actual results may vary significantly from those statements and may be affected by the risks we identified in today's press release and in our filings with the SEC, including our most recent forms 10-K and 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 our policy to not comment on our financial guidance during the quarter unless it is done through 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 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 to accompany this discussion, along with certain supplemental financial information and other data. With us here today are Adair Fox-Martin, CEO and President, Olivier Leonetti, CFO, and Philip Konesny, SVP of Finance. At this time, I'll turn the call over to Adair.

Thank you, Ryan. Hello, everyone, and a warm welcome to our Q1 2026 earnings call. This quarter's results reflect continued strength across the business as we capitalize on a large and growing set of opportunities. Demand is broad-based and durable. Execution is driving efficiency. And AI continues to fuel infrastructure investments that play to our strengths. Before I get into our results, I'd like to start with some important market context. Over the course of the past year, my conversations with customers have changed. A year ago, they were about piloting AI. Now, our conversations are focused on enterprise-wide adoption at scale. Two forces are driving this shift. Inference has grown from experimental workloads to an engine of real-time business decision-making. And the Gentic AI is moving from demos into distributed deployments, with agents acting autonomously to achieve business outcomes. The reality is that most enterprise architectures are not optimized for these workflows. Agents need private, low latency paths to data wherever it lives. They perform best at the edge, closest to where the decisions get made. and they must be able to move freely across models and clouds whilst staying within jurisdictional boundaries. Performance, cost, and compliance all suffer when today's agents run on yesterday's networks. Simply put, this deployment gap is an architecture problem. Enterprises need infrastructure that's purpose-built for the way AI operates, distributed, interconnected, sovereign by design, and in close proximity to the data that matters most. This is a market that we are built to serve. Equinix is not simply the world's largest digital infrastructure company, we are the world's most deliberately curated digital ecosystem. And our Q1 results demonstrate the progress we are making to capture the market opportunity. In Q1, our recurring revenue grew 10% on a normalized and constant currency basis, coming in at the high end of our expectations. This is our second straight quarter of double-digit MRR growth. At the same time, we are driving continued margin improvement. Q1 was also the largest quarter of total sales activity in our history. inclusive of annualized growth bookings and pre-selling activity. Total sales activity was up more than 35% year over year. We drove significant interconnection and capital billing growth, whilst reducing churn, reflecting ecosystem strength across our key operating metrics. And we are expanding our capacity whilst bringing new products to market that extend our runway for growth. Our progress stems from the extraordinary efforts of our team, and I'm proud of the way our employees are stepping up to meet the moment. Let me now provide some color on our overall results and what's driving our performance. As you saw in our press release, our Q1 results do not include the X scale Hampton lease. We are nearing execution on expanded mutual beneficial terms with our customer. Olivier will provide additional details on how you should model Hampton. Adjusting for the timing of Hampton, our Q1 revenue, AFFO and AFFO per share results were all ahead of our expectations. Overall, our X-Scale pipeline is robust, given that our remaining capacity is in major metros. Our momentum reinforces our confidence in the trajectory for the year. As such, we have raised our guidance across several key metrics. I am especially pleased with the strength of the position we are building across the AI inferencing ecosystem. The expansion of our relationships with the world's leading hyperscalers, neoclouds, AI security vendors, and model providers serves as a magnet for agentic AI workloads. Eight of the top 10 AI model providers and four of the top five NEO clouds are actively expanding with Equinix. They have placed more than 110 separate network nodes with us to support mission critical and latency sensitive elements of their architectures. Consistent with the prior quarter, approximately 60% of our largest deals in Q1 were AI related. Additionally, Large capacity fabric connections have tripled from just a year ago. We believe there is meaningful upside to come, given we are still in the early days of the agentic AI wave and inferencing adoption. This momentum is part of a broader uptick in customer demand, spanning a wide range of AI cloud and networking workloads. Now let me highlight some recent wins and associated use cases. Cupid Pharmaceuticals, a quantum AI-driven drug discovery company, relies on Equinix for the high-performance, low-latency infrastructure required to run millions of GPU-intensive molecular simulations. By deploying a dedicated GPU cluster in Equinix data centers, With direct cloud interconnection, Qubit has reduced experimental cycles by 20 times, whilst lowering costs by a factor of five. Most importantly, our solutions are accelerating the path from discovery to potential therapies that can save lives. Yamlin Construction, a leading construction and engineering services company in Asia, chose Equinix because of our neutral platform, presence across major metros, and connectivity solutions to enable their multi-cloud AI platform. They are using our fabric interconnection portfolio to power their network infrastructure, which is the base for innovative solutions such as AI-powered robotics and drones for on-site risk assessments and smarter decision-making. During the quarter, we expanded our partnership with Options IT, the number one provider of infrastructure to global financial services firms. They selected Equinix because of our presence in the locations that matter most to their operations and ecosystems, including London, New York, Singapore, and Tokyo. We are enabling Options IT to deliver private cloud and AI-managed infrastructure solutions to grow their business whilst meeting the data sovereignty requirements of their customers. We also grew our relationship with Maersk, a global leader in integrated logistics, as it digitizes critical supply chain infrastructure. Maersk recently selected Equinus as its primary data center partner to support high performance and AI workloads, including its first liquid-cooled AI deployments in Frankfurt. our global footprint, secure and resilient operations, and industry-leading interconnection capabilities are supporting Maersk's ongoing network transformation and long-term growth strategy. I'm exceptionally grateful to all our customers and partners for trusting Equinix to help move their business forward. The outcomes we are enabling for them reflect rigorous execution against our strategic pillars. Starting with Serve Better, we delivered annualized growth bookings of $378 million in Q1, up 9% year over year, with approximately $140 million of pre-selling activity on top of that. As I mentioned earlier, that's 35% growth in total sales activity in the quarter, resulting in a record backlog. Transaction volumes continue to demonstrate a broad base of workload requirements, with over 3,800 transactions spanning more than 3,100 unique customers in the quarter. Importantly, we also saw increased customer adoption of our self-service portal. Our portal is a key area of focus as we work to create a better customer experience. It also drives efficiencies within Equinix compared to a traditional quote-based ordering. This is one example of our broader focus on digitizing processes and workflows across the company. Customers placed 20,000 orders through our portal in Q1, up 12% year-over-year, and we intend to continue driving enhancements to this solution. Turning to Solve Smarter, our customers consistently raise two key challenges to us. The first is AI infrastructure fragmentation. Enterprises are spending too much time and budget navigating dozens of disconnected AI model providers, GPU clouds, data platforms, and security services. The Equinix Distributed AI Hub, which we introduced at NVIDIA GTC, solves this by giving enterprises a single, private, low latency connection to the entire AI ecosystem. Unlike AI marketplaces built by providers with their own services to sell, our distributed AI hub is completely neutral, providing access to all models and clouds so customers can select what's best for them. The second challenge facing customers is network complexity. Most enterprise networks are not designed to handle distributed AI workloads, and it's resulting in degraded AI performance, inflated costs, and compliance risks. Equinix Fabric Intelligence solves these problems by monitoring network performance in real time, automatically adjusting configurations, and flagging anomalies before they become outages, all without human intervention. Unlike other network management tools that sit on top of the network, Fabric Intelligence is built directly into our Fabric interconnection platform. This is a structural competitive advantage given the more than 500,000 live interconnections across our ecosystem. Our innovation is extending our market leadership and driving growth. Total interconnection revenue was up 9% year-over-year in Q1, boosted by fabric revenue growth of 26% year-over-year. Fabric bookings were up 70% year-over-year as our attach rate continues to increase. These growth rates are all on a normalized and constant currency basis. On Bill Boulder, we continue to expand our capacity to meet demand. We have 46 major projects underway across 32 markets, including six X-scale projects. More than 70% of this retail expansion capex is in our major metros, with the remainder focused on critical expansion markets, particularly in our Asia region. Given the strength of our pre-sales motion, approximately 25% of our 2026 retail capacity expansion has already been sold. We continue to meaningfully grow our pipeline for new powered land and capacity expansion opportunities that can enhance our long-term growth prospects in key metros and deliver attractive returns. And we're not just growing, we're doing it responsibly. Last week, we released our annual sustainability report. It shows how we are building essential infrastructure the world needs in ways that are affordable for our communities, sustainable for our planet, and reliable for our customers. These have long been core Equinix values, and they will continue to guide our future investment decisions. In Q1, we announced an important investment in one of the world's most sustainability-focused markets, as we signed a joint agreement with Canada Pension Plan Investment Board to purchase at Nord. This deal will further enhance our position in the Nordics by giving us access to an installed and active development pipeline of approximately 800 megawatts expected to come online over the next five years. At Nord's footprint in key markets such as Copenhagen is complementary to our existing EMEA operations and is well positioned to serve enterprise, cloud, and AI growth. The transaction is subject to closing conditions and is expected to be immediately accretive to AFFO per share upon the closing. Overall, Q1 demonstrated continued momentum across the business, and we see significant opportunities to accelerate growth as we deliver on our strategy. I'm now going to turn the call over to our new CFO, Olivier Leonetti, to go into more detail on our financials. Olivier joined us in March. He has already proven to be an excellent addition to our leadership team. Previously, Olivier was CFO of Eaton & Johnson Controls, two large suppliers to the data center industry. He has a strong track record of delivering profitable growth and creating shareholder value. And we look forward to his contributions to our success as we work to deliver healthy revenue growth, margin expansion, and superior returns. Olivier, over to you.