Digital Realty Trust, Inc.

Good afternoon, and welcome to the Digital Realty second quarter 2025 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. Callers will be limited to one question, and we will aim to conclude at the top of the hour. I would now like to turn the call over to Jordan Sattler, Digital Realty's Senior Vice President of Public and Private Investor Relations. Jordan, please go ahead.

Thank you, Operator, and welcome everyone to Digital Realty's second quarter 2025 earnings conference call. Joining me on today's call are President and CEO Andy Power and CFO Matt Mercier. Chief Investment Officer Greg Wright, Chief Technology Officer Chris Sharp, and Chief Revenue Officer Colin McLean are also on the call and will be available for Q&A. Management will be making forward-looking statements, including guidance and underlying assumptions on today's call. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC. This call will contain certain non-GAAP financial information. Reconciliations to the most directly comparable GAAP measure are included in the supplemental package first to the SEC and available on our website. Before I turn the call over to Andy, let me offer a few key takeaways from our second quarter results. First, we posted $177 million of new bookings in the quarter at 100 percent share, including $135 million at digital realty share. Record performance in the zero to one megawatt plus interconnection product set stole the show in the quarter with $90 million of bookings. Second, core FFO surged to a record $1.87 per share, outperforming expectations for the quarter and contributing to an increase in our revenue, adjusted EBITDA, and core FFO per share guidance for full year 2025. And third, we continue to extend our runway for better long-term growth. with oversubscribed LP equity commitments for our first U.S. Hyperscale Data Center Fund, additional development site acquisitions in key U.S. markets, and a robust balance sheet that is highlighted by more than $7 billion of liquidity and below-target leverage. With that, I'd like to turn the call over to our President and CEO, Andy Power.

Andy Power Thanks, Jordan, and thanks to everyone for joining our call. As enterprise digital transformation cloud computing, and AI adoption continue to accelerate, Digital Realty's global platform is uniquely positioned to meet the full spectrum of customer needs while delivering differentiated value. With our 20-year track record of execution as a data center operator, 5 gigawatts of development capacity, and more than $15 billion of private capital supported, Digital Realty has the wherewithal to service its growing enterprise and hyperscale customer base for years to come. Over the past two and a half years, we have been focused on driving better long-term sustainable growth in core FFO per share, and we are starting to see the fruits of our labor. A key pillar of our full spectrum strategy is our 0 to 1 megawatt plus interconnection business, which is anchored by connectivity-rich metro campuses. These campuses, typically located near where data is created and consumed, host mission-critical deployments that support hybrid multicloud IT, vital network infrastructure, industry-specific latency-sensitive applications, and AI inference, among other workloads. The common thread across these use cases is connectivity, and we have made it a priority to enhance our interconnection capabilities and services across the platform. Our focus on strengthening the customer value proposition is delivering results. Bookings in our zero to one megawatt plus interconnection product set have seen consistent growth, with momentum accelerating over the past year, even as large AI-oriented leases have been in the spotlight. At the beginning of last year, we set an ambitious goal to double our co-location bookings. and we're well on our way to achieving it. In the second quarter, we signed 177 million of gross leases, including 135 million at share. Digital Realty's share of bookings were led by 90 million in our zero to one megawatt plus interconnection category, a record result that is 18 percent higher than our prior record set only two quarters ago. Over the past four quarters, We have booked over $300 million in this category, up from approximately $200 million in 2023. This quarter's success wasn't driven by any single deal or even a dominant metro. Instead, leasing was broad-based with equal contributions from AMEA and the Americas, along with a healthy dose from APEC. Importantly, we also delivered record interconnection bookings in the quarter, as the momentum we have seen in the 0 to 1 megawatt category is starting to pay off, as customers have deployed their gear in our facilities and need to support the underlying workloads with connectivity. The bottom line output of this success is our core FFO per share growth. We earned a record $1.87 per share this quarter, a robust 13% increase over last year's results, and 6% higher than last quarter. While the rate of acceleration and bottom-line growth this quarter is notable and demonstrates the significant momentum we have in our business, our growth will be best measured in years. With our backlog at 826 million, we have strong visibility through the end of 2025 and beyond. Matt will provide details on the financials in a few minutes. The demand environment for data center capacity remains strong and broad-based. both geographically and by product type, driven by secular tailwinds in digital transformation, cloud, and AI. Demand for both sub-one megawatt and large capacity blocks continues unabated. For sub-one megawatt capacity, our pipeline is broad and deep across all regions, and as evidenced by our four-month book to build this quarter, these deals can typically be deployed much more quickly. We continue to position our large capacity blocks to support the growing needs of our hyperscale customers as we work to align development deliveries with the availability of power, and this approach has served us well so far. In North America, near-term capacity blocks continue to be the most in demand, and we've had great success in placing our near-term development, so most of the discussions that we are having are focused on late 2026 and early 2027 deliveries. In EMEA, demand from AI deployments is growing but is still well behind the U.S. Consistent with historical trends, the larger capacity blocks in this region tend to be smaller than those in the U.S. In APAC, hyperscale demand is expanding, particularly in Tokyo and Singapore. Similar to EMEA, AI deployments are growing in APAC but lag the U.S. Another sign of the strong demand environment is the tremendous success that we have enjoyed in launching our U.S. Hyperscale Data Center Fund, the latest evolution of our strategic objective to bolster and diversify our capital sources. Since our last earnings report, we've continued to receive commitments to the fund from a broad array of global institutions, including sovereign wealth funds, pension funds, insurance companies, endowments, and other institutional investors. We have received more than $3 billion of LP equity commitments to date and are on target for our final closing well ahead of our target raise and our original schedule. We are truly humbled that so many of the world's leading investors chose to invest their long-term capital in Digital Realty's inaugural fund. The early success of our U.S. hyperscale fund improves our strategic position by enabling us to continue to meet the growing and diverse needs of our hyperscale customers without overtaxing our balance sheet. While execution across our co-location and interconnection category will serve as the primary lever for growth in 2025 and 2026, we expect our substantial hyperscale capacity to bolster our backlog and to extend our runway for core FFO growth into 2027 and beyond. In today's competitive business environment, Enterprises need the ability to scale quickly and securely across regions, and that's exactly what platform digital enables. Many of our customers start with a single deployment but rapidly expand across our global footprint to interconnect with clouds, partners, and data at the edge. This seamless scalability is not only solving real customer challenges, it's also enhancing our value proposition, evidenced by more customers, lower churn, deeper wallet share, and growing recurring revenue streams. This strategic advantage continues to set digital realty apart, driving the addition of 139 new logos in the second quarter. Now, as we announced this morning, we're providing enterprises with additional state-of-the-art services through our partnership with Oracle Solution Centers to further optimize these deployments and accelerate their hybrid IT and AI adoption. Key customer wins in the quarter include A global financial services company is expanding its presence on platform digital to another metric to solve compliance and data localization challenges. A leading blockchain provider is deploying edge nodes in multiple locations on platform digital to support decentralized private and public networks. A healthcare services company is expanding its presence on platform digital to solve data resiliency and locational challenges. An autonomous vehicle developer is expanding to two more metros on Platform Digital to take advantage of the available cloud and network ecosystems. A global cloud provider is expanding its presence on Platform Digital by creating a new edge availability zone to support their growing customer base. And having grown up a Star Wars fan, I am particularly delighted to share that Lucasfilms is expanding their presence on Platform Digital, taking advantage of high-performance compute and AI capabilities to solve video rendering, transfer, and editing challenges. Before turning it over to Matt, I'd like to briefly highlight our progress on global sustainability. In the second quarter, we maintained strong execution against our sustainability goals and were once again recognized by Time and Statista as one of the world's most sustainable companies of 2025, a reflection of our continued leadership in this space. In late June, we published our 2024 impact report, which showcases digital's ongoing commitment to clean energy, resource conservation, and other sustainable business practices. Among the highlights in the report, we further expanded our renewable energy supplies with 185 data centers now matched with 100 percent renewable energy, while 75 percent of our global electricity needs were met with renewable energy in 2024. a 9% increase from the prior year. We achieved a 14% year-over-year reduction in water usage intensity in our North American co-location portfolio by implementing water-free-based cooling systems and water conservation projects. We expanded our portfolio of certified sustainable data center developments, adding 1.9 million square feet in 2024 and bringing our global total to a cumulative 15 million square feet. These initiatives reflect our ongoing commitment to minimize Digital Realty's environmental footprint while delivering sustainable growth for all of our stakeholders. And with that, I now turn the call over to our CFO, Matt Mercier.