Digital Realty Trust, Inc.

Good afternoon and welcome to the Digital Realty Second Quarter 2026 Earnings Call. Please note this event is being recorded. During today's presentation, all parties will be in 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 Sadler, 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 2026 earnings conference call. Joining me on today's call are President and CEO Andy Power and CFO Matt Mercier, Chief Investment Officer Greg Wright, and 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 a 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. Reconciliation is the most directly comparable GAAP measures are included in the supplemental package furnished 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 had an extraordinarily productive quarter, reflecting strong execution across our key growth factors, which translated into meaningful upside versus our expectations across revenues, adjusted EBITDA, and Core FFO. Core FFO, excluding net promote income, reached $2.13 per share in the second quarter, exceeding our expectations and delivering 14% year-over-year growth. Accordingly, we are once again raising our 2026 Core FFO per share guidance range, implying 10% constant currency growth at the midpoint. Second, Bookings in the quarter were impressive overall, with record 0 to 1 megawatt plus interconnection signings that surpassed the $100 billion mark. But the real standout this quarter was renewal spreads, which surged to a record 25 plus percent. And just after quarter end, we signed two hyperscale leases, further demonstrating the momentum in our greater than a megawatt category. Third, strong bookings pushed our total backlog to a new record of $1.9 billion at 100% share, or $1.4 billion at digital realty share. The backlog was roughly 30% of in-place data center revenue at the end of June, which should support multiple years of double-digit growth. And finally, we announced four strategic transactions across our four growth pillars of colo and connectivity, hyperscale, and strategic private capital. These transactions strengthen Digital Realty's value proposition and are expected to bolster Digital Realty's runway for growth for years to come. With that, I'd like to turn the call over to our President and CAO, Andy Power.

Thanks, Jordan, and thanks to everyone for joining our call. There's a lot of good news to share this quarter, driven by broad-based momentum across our business, our global full-spectrum strategy, and our team's incredible execution. Our business is firing on all cylinders and this quarter showcases the strength and scalability of our platform. Over the last several years, we've been planning and executing to deliver full-spectrum data center infrastructure solutions to our large and growing customer base. These efforts are clearly bearing fruit and at the same time, we continue to sow the seeds to deliver the capacity our customers require and to capture the opportunity for which Digital Realty is uniquely positioned. Digital Realty delivered record results in the second quarter of 2026, reflecting continued execution across multiple regions, products and customer segments. We also continue to benefit from the strongest development and leasing pipelines in the company's history, providing confidence in our ability to meet future customer requirements well beyond 2026. Our strategic focus is on our three core pillars of growth, co-location and connectivity, hyperscale, and strategic private capital. Together, these complementary components are driving strong performance today and fortifying our foundation for the long term, while enhancing our ability to support the robust demand for digital infrastructure and AI around the world. Let me begin by focusing on co-location and connectivity, which remains one of the most differentiated aspects of the digital realty platform. As AI deployments continue to evolve, we believe customers increasingly value environments that combine power, proximity and connectivity. During the second quarter, we delivered yet another bookings record in our co-location and interconnection business. Approximately two years ago, Bookings in our zero to one megawatt plus interconnection business were averaging about 50 million per quarter. We set a goal of doubling that level over time by focusing on the growing importance of highly connected digital infrastructure. During the second quarter, we achieved that objective for the first time, delivering 108 million of bookings in our zero to one megawatt plus interconnection business and marking a third consecutive quarterly record. This milestone reflects strong demand and continued success in capturing highly connected enterprise and service provider deployments. Today, our customers can access a global community of approximately 6,000 cloud, network, enterprise, and service provider customers across more than 300 data centers worldwide. We are also seeing increasing levels of engagement from customers deploying AI-enabled applications. Many AI deployments require organizations to connect data, networks, cloud platforms, and end users in efficient and scalable ways, and this dynamic plays directly to the strengths of platform digital. Turning to hyperscale, demand for large-scale deployments remains healthy and increasingly global, though the pace and scale of activity vary across regions. Activity during the quarter was led by the Americas, with particularly strong contributions from South America, while APAC continues to support a growing pipeline of larger opportunities. We also continue to see customer engagement across Europe, albeit a generally smaller scale, reinforcing the broad-based nature of demand for digital infrastructure. Subsequent to quarter end, we signed two additional hyperscale leases in the US, representing another $410 million of annualized gap-based rent at 100% share, or $205 million at digital realty share. While hyperscale leasing can be episodic from quarter to quarter, we remained encouraged by both the breadth of customer activity and the strength of our pipeline. In late June, we announced the acquisition of Blackstone's ownership interest in three fully leased hyperscale data centers in Northern Virginia, totaling 288 megawatts of IT capacity. The transaction accretively increased our ownership in a set of best-in-class facilities that we have designed, constructed, and leased, and does so at an attractive entry point while continuing to partner with Blackstone on the remaining 400-plus megawatts in our development venture. Also in late June, we announced the expansion into the Kansas City metro, securing 600 megawatts of utility power that begins to ramp in early 2028, with a long-term runway of up to 2 gigawatts of utility power. The timing of power delivery aligns well with customer deployment requirements and reflects the importance of proactively securing capacity ahead of demand. Kansas City benefits from strong connectivity supported by extensive long-haul fiber infrastructure, more than 25 network providers, and less than 10 millisecond latency to more than 50% of the U.S. population. Combined with its central location and substantial power availability, this market is proving an important hub for AI and cloud workloads, with several hyperscaler self-build deployments already underway. Together, these actions enhance our growth trajectory and extend our development runway. Coupled with the strength of our leasing pipeline, they reinforce our ability to support the expanding hyperscale cloud and AI infrastructure needs around the world. Turning to our strategic private capital business, Digital Realty has employed private capital to fuel the company's growth for over a decade through a series of financial and strategic joint ventures and, more recently, the successful formation of our $3.25 billion U.S. hyperscale data center fund that closed earlier this year. Using private capital, Digital Realty can scale hyperscale development capacity beyond the limits of our balance sheet to better serve the needs of our largest customers. This approach delivers near-term growth through fee income, expands our product availability and investment capacity, and enhances the return on invested capital to DLR shareholders. In June, we entered into an agreement to acquire 100% of Columbia Capital a 30-plus year leading asset management platform in the digital infrastructure space. The Columbia Capital transaction will meaningfully scale our private capital platform, adding more than $9 billion of fund commitments and a well-established base of hundreds of investors, including sovereign wealth funds, pension funds, insurance companies, endowments, and other institutional investors. Strategically, Columbia Capital expands our expertise and visibility into adjacent sectors that underpin our data center business, including fiber, mobility and enterprise technology, while allowing us to participate in those opportunities alongside third party capital rather than relying solely on our balance sheet. Columbia's experienced investment team and established portfolio complement Digital Realty's global operating platform and will strengthen investment capabilities to take advantage of the expanding AI infrastructure ecosystem. Lastly, this transaction will strengthen our earnings profile and position digital realty to drive additional long-term value creation. During the second quarter, we continue to see both enterprises and hyperscalers expand across platform digital. A few examples include A multinational financial firm is growing its platform digital footprint by deploying private AI inference capabilities to enable data exchange across financial, network, and cloud ecosystem partners. A GPU as a service provider, together with a global AI infrastructure company, are deploying in Platform Digital's new data center in Barcelona to increase networking capacity and reduce costs while creating a distributed inference AI-ready ecosystem to support advanced AI workloads for growing enterprise demand. A global financial service company chose Platform Digital to support next-generation AI infrastructure and inference-enabled workloads, leveraging interconnected digital ecosystems. And a global cloud computing and content distribution provider is expanding into a new metro by leveraging the leading connectivity propositions available on Platform Digital. Before turning the call over to Matt, I'd like to spend a moment on the increased public attention that data centers are receiving and how digital reality is doing its part to engage constructively and operate responsibly and sustainably. As an industry, we are becoming significantly more visible. That's understandable. Demand for digital infrastructure continues to grow rapidly, and data centers are increasingly recognized as critical infrastructure. Despite the growing role data centers play in our daily lives and the fact that we've been operating as a public company focused on data centers for more than two decades, most people have never visited one and may not fully appreciate the critical role these facilities play in enabling modern society. The reality is that digital realty data centers support nearly every aspect of the modern economy. Every cloud application, video call, online class, Financial Transaction, AI Query, streaming service, healthcare record, and social media interaction ultimately depends on digital infrastructure. Whether you're working remotely, connecting with your family across the world, ordering and paying for coffee, food, or anything else through an app or online, navigating the globe, using connected devices to track calories, glucose levels, or overall wellness, Monitoring your home via doorbell cam, keeping track of your finances and the market, or running a small, medium, or large business. Data centers provide the physical foundation that makes those experiences possible. For digital realty, that's something to be proud of. Digital realty data centers increasingly support economic growth, innovation, education, healthcare, communication, and national competitiveness. They also create high quality jobs, generate substantial tax revenue for local municipalities that support schools, public safety, support improved resiliency for the utility grid, and often serve as catalysts for broader economic development within the communities where they operate. In our two decades operating data centers, we have seen these benefits firsthand across the markets we serve around the world. As the data center market grows, We believe it is equally important that our industry continues to grow responsibly. At Digital Realty, we are committed to partnering with our customers, communities, utilities, and policymakers, and we believe our recently published impact report provides transparency on our performance and serves as a useful scorecard for how we're performing against those objectives. Let me touch on a few highlights from the report. During 2025, we achieved 93% renewable energy coverage globally, matched 205 sites with 100% renewable and emissions-free energy, and expanded our contracted renewable energy portfolio to approximately 1.7 gigawatts. These efforts reflect our commitment to supporting customer growth while remaining a responsible partner to the communities and energy systems in which we operate. Our data centers also play a constructive role in supporting grid reliability. mitigating risk during periods of peak demand, and helping to ensure the grid remains reliable for everyone. In other words, we're not simply consumers of electricity. We also support the resiliency of the broader energy system when it is most needed. From 2023 to 2025, we expanded our portfolio capacity by more than 24%, while limiting water consumption growth to just 3%, with nearly half of our water source from non-potable supplies. Our 300-plus data centers globally use less water than 18 California golf courses, while there are 16,000 golf courses in the U.S. alone. We are proving that digital infrastructure can scale sustainably while using resources more efficiently. And with that, I'll now turn the call over to our CFO, Matt Mercier.