Digital Realty Trust, Inc.

Good afternoon and welcome to the Digital Realty Third Quarter 2020 Earnings Call. Please note this event is being recorded. During today's presentation, all parties will be in a listen-only mode. Following the presentation, we will conduct a question and answer session, and callers will be limited to one question plus a follow-up. Due to time constraints, we will conclude promptly at the hour. I would now like to turn the call over to John Stewart, Digital Realty's Senior Vice President of Investor Relations. John, please go ahead.

Thank you, Andrea. The speakers on today's call are CEO Bill Stein and CFO Andy Power. Chief Investment Officer Greg Wright, Chief Technology Officer Chris Sharp, and EVP of Sales and Marketing Corey Dyer are also on the call and will be available for Q&A. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC. This call will contain non-GAAP financial information. Reconciliations to net income are included in the supplemental package furnished to the SEC and available on our website. Before I turn the call over to Bill, I'd like to hit the tops of the waves on our third quarter results. We built upon the recent momentum in our business, landing a record number of new logos across broad and robust bookings that were well diversified by customer type and geographic region. We delivered solid financial results, with core FFO per share five cents ahead of consensus, and we raised our outlook for revenue, EBITDA, and core FFO per share for the second time this year. We extended our global platform, entering Croatia with the acquisition of Altus IT and and securing customer growth in existing markets across EMEA with key land purchases and new builds. Last but not least, we further strengthened the balance sheet, raising over $2 billion of long-term capital and retiring nearly $2 billion of high coupon debt and preferred equity. With that, I'd like to turn the call over to Bill.

Thanks, John. Good afternoon, and thank you all for joining us. Our formula for long-term value creation is is a global connected sustainable framework. And despite the pandemic, our third quarter results demonstrate the strength of this framework. Our business is increasingly global with nearly 60% of third quarter bookings outside North America. And we landed a record 130 new logos from around the world. Bookings were also well diversified by customer type with enterprise co-location and interconnection accounting for nearly half the total. This robust and diverse business mix demonstrates the power of our global platform and further validates our strategic vision of being the only global provider dedicated to the full customer spectrum. Let's turn to our health and safety measures on page three. We remain focused on keeping our employees customers and partners safe during this pandemic. We remain fully operational across our 284 data centers, and we continue to support our customers' growth by bringing additional capacity online while expanding our global platform. We've implemented enhanced safety protocols, such as requiring masks, social distancing, engaging specialty cleaning services, and maintaining rotational 24-by-7 staff coverage by leaning on local personnel. As the pandemic continues, we are seeing signs of permanent adjustments that are likely to be long-term tailwinds for our business. More enterprises are embracing a distributed workforce with a growing work-from-home component, while a recent Gardner survey of nearly 2,000 CIOs around the world found that accelerating digital innovation and leveraging emerging technologies are key priorities during the pandemic. Of course, I would be remiss if I did not again extend our gratitude to our employees in critical data center roles who continue to come into work every day at our facilities around the world. They make possible the service and support we provide our customers. Thank you to the terrific on-site digital realty team. Let's turn to our sustainable growth initiatives here on page four. In April, we reached a wind energy agreement to supply approximately 30% of our power needs in the Dallas, Texas area with renewable energy. In late August, we further expanded our renewable energy capacity in Texas by sourcing approximately 65 megawatts of solar power. Once the solar project is fully operational by mid-2021, our entire Dallas portfolio will be powered by 70 percent renewable energy. We completed our first wind power transaction in 2016, and we have since gone on to contract 240 megawatts of wind and solar energy in Texas. We remain committed to manage our environmental impact, optimizing our use of energy and natural resources, serving a social purpose, and delivering sustainable growth for all stakeholders. Let's turn to our investment activity on page five. We continue to expand our global platform with a small but highly strategic acquisition in Southeastern Europe, along with land purchases and groundbreakings in existing markets across the continent. In early September, we announced that we had acquired Altus IT, the leading carrier-neutral data center provider in Croatia, expanding our connectivity footprint into the Balkans and Eastern Europe, and establishing a gateway to Southeastern Europe through access to one of the most interconnected data centers in the region. This transaction was also a prime example of how seamlessly the classic interaction and classic digital realty teams are working together. In Zurich, we're breaking ground on a new data center. Two of our five biggest deals during the third quarter landed in Zurich, and the expansion of our campus will provide runway for customer growth at the leading cloud and interconnection hub in Switzerland. We also recently acquired land parcels within one kilometer of our highly interconnected campuses in Vienna, as well as Madrid. These strategic land holdings will provide additional capacity, enabling local and global service providers to seamlessly expand adjacent to their existing deployments. In early July, we announced the opening of the first phase of MRS3, our data center in Marseille. InterActions Marseille Campus is one of the world's leading digital hubs for intercontinental data traffic, with over 150 network service providers. The new facility will offer customers expanded access to the vibrant community in Marseille, including numerous connectivity providers, digital media, and cloud segments, along with local as well as global enterprises. Finally, in mid-July, we announced that we acquired the freehold to the land under Interactions and our Landstrasse campus in Frankfurt. In addition, we are also under contract to acquire the Neckermann site, a separate parcel within a kilometer of Interactions' existing campus that will support the development of up to 180 megawatts of IT capacity. We believe that we are creating significant value by combining the leasehold and freehold positions on one of the most highly connected campuses in Europe, while the adjacent expansion capacity provides runway to support customer growth in a key European metro for years to come. Let's turn to page six for an update on the interaction integration. As you've heard me say before, integration is our top priority for 2020. and we continue to make solid progress despite the pandemic. Both teams have risen to the occasion and have come together to continue to serve our customers' needs throughout this crisis. It is great to see this collaboration. Andy will cover our customer wins in more detail. But both sales engines are working well together, and we have begun to realize some of the cross-selling opportunities we envisioned when contemplating this transaction. We remain on track to meet our synergy targets and underwriting budgets. Talent retention is also running ahead of plan at over 95%, with no loss of key personnel. Along those lines, as we announced when we first broke the news of our combination with InterAction one year ago today, early next year, David Rueberg will be transitioning within digital realty from his day-to-day responsibilities as Chief Executive of EMEA and will be moving into a global strategic advisor role. In this capacity, David will be responsible for the development and oversight of our corporate strategy, including the company's effort to organize and execute a program to identify and develop high-value communities of interest across our global platform. David plans to remain on the board of directors of our Dutch holding company, and he will continue to play a leadership role on certain of our key global customer accounts, bringing to bear his longstanding relationships and thought leadership, in addition to supporting our team on new market and product development, as recently demonstrated in Eastern Europe. Upon David's transition, Legacy Digital MD EMEA Jeff Tapley, and Legacy Interaction MD, Jan-Peter Ontan, will continue to oversee the company's EMEA business. I would like to thank David for his tremendous contributions and his successful efforts to integrate our businesses. We look forward to benefiting from his strategic insights for years to come.