DigitalBridge Group, Inc.

followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Severin White, head of IR. Please go ahead.

Good afternoon, everyone, and welcome to DigitalBridge's second quarter 2024 earnings conference call. Speaking on the call today from the company is Mark Gansey, our CEO, and Tom Meroffer, our CFO. I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on this call is as of today, August 7, 2024. and DigitalBridge does not intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC for the year ending December 31st, 2021, and our Form 10-Q to be filed with the SEC for the quarter ending June 30, 2024. Great. With that, let's get started, and I'll turn the call over to Mark Ganse, our CEO.

Mark. Thanks, Severn, and welcome everyone to our second quarter 2024 business update. I appreciate the opportunity to outline some of the compelling progress we've made year to date, building and scaling DigitalBridge. As you'll see today, we've made tangible progress across many of our key 2024 priorities, particularly around capital formation, linked to the AI infrastructure ecosystem. So let's get started. First and foremost, number one, financial performance. Delivering peer-leading revenue growth with expanding operating margins is central to the Digital Bridge investment thesis. We've delivered that growth this quarter, with management fee revenues up 18% over the prior year, along with growing margins. Tom will walk you through the financials later in this call. Second, as you know, the key driver of these management fees and fee-related earnings over time is new capital formation. Our AI-powered data center vertical is increasingly a key focus for our global limited partners. It's underpinning strong capital formation across debt and equity markets to support the growth of our portfolio, and it's catalyzing new investment solutions. This is where our position as the largest private manager of data centers globally really matters. I'll walk you through why this is important to us today. Number three. We're well-positioned to meet our annual fundraising and financial goals for the year, with $3.4 billion in new CM raised through today, directly in line with where we were last year on our way to $7 billion in new capital formation. And we're heading into a seasonally strong final four months of the year. I have high conviction we'll meet and exceed our targets here. So let's begin by highlighting the capital formation across our portfolio year-to-date and how that drives value creation at DigitalBridge. Next slide, please. This slide highlights how capital formation in 2024 is being driven by strong, limited partner demand for AI-levered data center platforms. When you look across the 14 billion in equity and credit we've raised so far this year, about 80% of that is earmarked for investment across our data center platform. That includes fresh VM to fuel investment in new platforms, anchor co-investments that boost our firepower, and generates carried interest. and credit financings to support CapEx, both in the form of long-term debt and ABS securitizations, which we've historically used to drive down our borrowing costs over time. Credit and equity markets want to partner with DigitRidge to support the growth of our ecosystem. We've highlighted a few notable financings year-to-date, including Switch, DataBank, and Vantage, which placed a $3 billion green loan earlier this year to fuel our North American expansion. We've also been very active in co-investment, supporting the growing equity needs of our platforms with Scala, Vantage, and Switch, all bringing in new investors to support their continued growth. Bottom line, we've got an incredibly dynamic portfolio that continues to grow and attracts capital. Next slide, please. To understand why Limited Partners and, more broadly, capital markets are allocating to DigiRidge, you have to understand our unique data center footprint and our differentiated vision for the evolution of AI infrastructure. First, let's start by profiling the largest global private data center portfolio today, diversified across six platforms with exposure to the fastest growing segments of the data center market. Today, we have four gigawatts of capacity available across 173 data centers. We cover 84 markets globally across 75 campuses. That's over 20 million square feet of data center capacity. As you can see on the left, we own platforms that serve the largest public cloud hyperscale workloads. The private cloud, where you also see significant AI training deployments today, and all the way to the edge, which will play an increasingly important role as generative AI applications proliferate to the edge. This is a diverse set of high-quality, market-leading platforms. And look, we're ready to expand significantly to over 7.5 gigawatts within the next five years, nearly double where we stand today. That's another 93 data centers in development, which equates to another 35 billion or so of development CapEx that DigitalRidge is going to deploy across these six powerful platforms. These are larger, highly densified data centers architected to serve the AI economy and AI workloads. This portfolio and development pipeline uniquely positions DigiBridge to serve AI's cloud-trained, edge-delivered future. Next slide, please. Let's put that investment and opportunity into context. As many of you know, AI infrastructure investment is re-accelerating. After 10 years of cloud investment that took CapEx from $25 billion to over $150 billion and created a market that generates over $300 billion in annual service revenues, Generative AI has catalyzed to an inflection point, re-accelerating investment across leading hyperscale technology companies upwards of $250 billion per annum. This is up nearly $100 billion from last year. We believe generative AI will drive the next 10-year plus CapEx cycle. So, as you see, while it's early days, we stick to our core thesis. You've heard this before. Follow the logos. And it's the customers, the ones with the deepest insights into generative value breakthroughs and their implications, the demand trajectories they're seeing for new services and new markets. And ultimately, the investment and the return on that investment that they're seeing today across their investments with a principal focus on AI infrastructure. On the left, we pulled a few quotes from some of the companies from their 2Q earnings, talking about their commitment to invest and the early results they're seeing in generative AI. We've seen this cycle play out before in public cloud. So let's rewind the clock. Was it a good idea for Amazon, Google, and Microsoft to invest in public cloud 10 years ago?