NASDAQ:EQIX Equinix Q2 2024 Earnings Report $838.10 +20.91 (+2.56%) Closing price 04:00 PM EasternExtended Trading$864.30 +26.19 (+3.13%) As of 07:33 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Equinix EPS ResultsActual EPS$3.16Consensus EPS $7.88Beat/MissMissed by -$4.72One Year Ago EPS$8.04Equinix Revenue ResultsActual Revenue$2.16 billionExpected Revenue$2.16 billionBeat/MissBeat by +$530.00 thousandYoY Revenue Growth+6.90%Equinix Announcement DetailsQuarterQ2 2024Date8/7/2024TimeAfter Market ClosesConference Call DateWednesday, August 7, 2024Conference Call Time5:30PM ETUpcoming EarningsEquinix's Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled at 5:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Equinix Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 7, 2024 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good afternoon, and welcome to the Equinix Second 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 objections, please disconnect at this time. I would now like to turn the call over to Chip Newcomb, Senior Director of Investor Relations. Operator00:00:18Thank you. You may begin. Speaker 100:00:21Good afternoon, and welcome to today's conference call. Before we get started, I would like to remind everyone that some of the statements we will be making today are forward looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements and may be affected by the risks we've identified in today's press release and those identified in our filings with the SEC, including our most recent Form 10 ks filed February 16, 2024 and our most recent Form 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 Equinix's policy not to comment on its financial guidance during the quarter unless it's done through an explicit public disclosure. Speaker 100:01:09In addition, we'll provide non GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why the company uses these 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 a presentation designed to accompany this discussion along with certain supplemental financial information and other data. We would also like to remind you that we post important about Equinix on the IR webpage from time to time and encourage you to check our website regularly for the most current available information. With us today are Adaire Fox Martin, Equinix's CEO and President and Keith Taylor, Chief Financial Officer. Speaker 100:01:57Following our prepared remarks, we will be taking questions from sell side analysts. In the interest of wrapping this call up in 1 hour, we'd like to ask these analysts to limit any follow on questions to 1. At this time, I'll turn it over to Adaire. Speaker 200:02:11Thank you, Chip. Good afternoon, and welcome to our Q2 earnings call. I'm honored to be hosting my first earnings call today as CEO and President of Equinix. I'm immensely proud to lead our dedicated team of more than 13,000 employees around the world. I would like to express my gratitude to Charles and the entire Equinix team for the warm welcome and the facilitation of a smooth transition over the past 2 months. Speaker 200:02:41I look forward to the continued partnership with Charles in his role as Executive Chairman, and I'm excited and optimistic about the road ahead. As a Board member for the past 4 years, I've witnessed many of the unique qualities that have driven Equinix's durable success. Our 25 years of investment has built a business now spanning 264 data centers in 72 metros across 6 continents. Our focus on customer value and outcomes has created interconnected digital ecosystems unrivaled in our industry. It is a phenomenal foundation to build upon as CEO. Speaker 200:03:25As the stewards of some of the most important digital infrastructure in the world, we are exceptionally and uniquely positioned to capitalize on the immense opportunities that lie ahead. Business transformation remains a critical priority our customers and the emergence of AI marks a pivotal point for our industry. AI, similar to the growth of cloud technologies a decade ago, will take time to fully develop. In the near term, AI training workloads are driving significant demand, particularly from service providers. Our Excale program continues to be a direct beneficiary of this demand. Speaker 200:04:07We intend to build on this momentum, meaningfully augmenting and extending our ex scale portfolio, particularly in North America. This will complement our robust portfolio across Europe and Asia Pacific. We are excited to share that we recently closed on land and power for our 1st multi 100 Megawatt ExCale campus in Atlanta. We look forward to announcing details of this project and our next ex scale joint venture in the coming months. At the operational end of the AI spectrum, our network nodes and inference workloads. Speaker 200:04:45As with cloud, Equinix continues to be the preferred location for network nodes as customers seek the right connectivity solutions for data ingestion and distribution. We also see inference demand beginning to take shape. We believe the implementation and deployment of these workloads will accelerate over the coming years. The neutrality, global reach and scale of platform Equinix can deliver the performance, network density and cloud adjacency, which inference workloads will require. We are already seeing significant enterprise and service provider interest in our deployment capabilities. Speaker 200:05:28In Q2, we partnered with WWT to serve Alnabic Technologies, an AI powered marketing analytics platform for enterprise. Almavic Technologies deployed their AI infrastructure at Equinix to run proprietary inference algorithms on massive datasets for predictable cost, privacy, speed and secure access to data sources in the cloud. InstaDeep, a leading provider of AI decision making solutions deployed a NVIDIA AI cluster at our Paris 10 asset to access key ecosystems, optimize their network and support their growth objectives. Our approach to the market opportunity created by AI is multifaceted and we believe it will deliver value in the short term and sustainable growth over the medium to long term. Our Excale offering provides the infrastructure and expertise required for massive scalable data center operations for our cloud and large scale technology customers. Speaker 200:06:39For our enterprise and mid market customers, we offer AI ready data centers and turnkey solutions, enabling them to scale efficiently and effectively as they introduce AI technologies into their business operations. For those who require high performance inferencing, our edge solutions handle the data at the edge where it is generated, ensuring optimal performance for the next generation of business applications. Over the past 2 months, I have embarked on a listening tour across a number of our locations, meeting with our customers, partners and employees. And whilst it is still early in my tenure and there is still work that I need to complete, I have noted some areas of opportunity that will underpin our strategy for the company going forward. The opportunity to simplify across numerous aspects of our business. Speaker 200:07:38This will allow us to accelerate our pace of execution. The opportunity to drive more focus. Whilst we may do less, the programs of work that we focus on will represent excellence and execution and deliver the highest quality outcomes. The opportunity to amplify our go to market efforts to delight our customers and energize our partners. Equinix has consistently demonstrated discipline and execution. Speaker 200:08:08This mantra of discipline allows us to deliver market leading returns on capital and serves as the underlying fuel for long term growth in AFFO per share, our core financial metric. Building on this foundation and executing on the opportunities I noted should create a simpler, more focused and ultimately higher valued company. With all of this in mind, I'll turn to our Q2 performance. Equinix had a great second quarter. We delivered record gross bookings. Speaker 200:08:45Our pricing remains strong. We continue to invest broadly across our offerings to further enhance the scale and reach of our industry leading platform. Our delivery of adjusted EBITDA and AFFO per share continues to run ahead of expectations. As you can see on Slide 3, Q2 revenues were $2,200,000,000 up 8% over the same quarter last year. This represents our 86th consecutive quarter of top line growth. Speaker 200:09:21Adjusted EBITDA was up 17% year over year with strong FFO per share flow through. Interconnection revenues stepped up to 9% year over year. These growth rates are all on a normalized and constant currency basis. In May, we announced the opening of our 1st data center in Johor with strong interest from customers across our new Malaysian footprint. In July, we announced our expansion into the Philippines through the planned acquisition of 3 data centers in Manila from Total Information Management. Speaker 200:10:01This transaction valued at approximately $180,000,000 is expected to close in the Q4 of 2024, adding more than 1,000 cabinets of capacity in addition to land for future development. The combination of our strong leadership position in our Singapore hub and our entries into Malaysia, Indonesia and the Philippines strategically position Equinix to help our customers capitalize on the expanding digital opportunity in the fast growing Southeast Asia region. Customers taking advantage of our expanding global footprint include First Digital, an Internet and Telecommunications provider. First Digital is significantly lowering total cost of ownership by building a multi cloud network with Equinix Fabric Cloud Router to connect to Cisco Webex and AWS across all three regions. Our global interconnection franchise continues to perform with over 472,000 total interconnections now deployed. Speaker 200:11:15Gross interconnection additions were at the highest level in 2 years and pricing continues to trend favorably. However, net interconnection adds were 3,900 due to grooming activity primarily in our content and networking verticals. We do expect this grooming to lessen over time. Equinix fabric growth was underpinned by 100 gigabit port additions and strong pull through from other digital services products. Network Edge experienced continued rapid growth with an expansion activity from existing customers. Speaker 200:11:54Key recent interconnection and ecosystem wins include Newham Exchange. This is a new company formed after the integration of the Santiago, Lima and Colombia Stock Exchanges. Capital market participants can now benefit from NUUM's extended reach, low latency and secure connectivity, supported by Equinix in key markets like New York and Sao Paulo. Our channel program delivered another solid quarter accounting for over 30% of new bookings and 55% of company new logos. We continued to see growth from partners like AT and T, Avant, Dell, HPE and Orange Business, with wins across a wide range of industry segments and use cases. Speaker 200:12:45Notable wins included an AI as a service solution via our distribution partner Tech Data and MSP partner Asia Pac. Leveraging a combination of colocation and Equinix Fabric, our partners are delivering an LLM for a high level learning institution based in Malaysia. Now before I turn the call over to Keith, I wanted to recognize that we believe we are in a position of strength financially from both the balance sheet and from an access to capital perspective. Our investment strategy delivers a strong return on invested capital, all of which gives us the flexibility to execute our go forward strategy. With that, I'll turn it over to Keith to cover the results from the quarter. Speaker 300:13:38Great. Thanks Sudhir. Now let me first say, I look forward to the next phase of the Equinix journey alongside you and know it's going to be a very exciting time for all of us at Equinix. Also good afternoon to all of those that are on the call today or whom might be listening later. So to start, we had a great second quarter as the team continued to execute against our plans. Speaker 300:14:01We had record gross bookings, closing more than 4,000 deals with more than 3,000 customers. We continued our trend of net positive pricing actions, and we ended the quarter with solid net bookings. Our forward looking pipeline remains deep, which we expect will drive momentum in the second half of the year, and we're delivering profitability ahead of our expectations. As a result, we're again raising our full year adjusted EBITDA and AFFO guidance and therefore AFFO per share too, our lighthouse metric. Also, as Adair highlighted, I'm excited about the next phase of our ex scale initiative. Speaker 300:14:40We plan to lean into this program as we've seen strong demand from this offering for this offering, as evidenced by both our cloud and AI bookings momentum. We continue to believe this off balance sheet JV structure with our equity partners is the right model to pursue this significant opportunity, which also drives durable value on a per share basis. To date, through the ExxCL JVs, we've invested about $4,700,000,000 in the program. Since our last earnings call, we leased an incremental 17 megawatts of capacity in our Silicon Valley 12 and Paris 13 assets. This brings our total Global Excale Leasing to 3 65 Megawatts, representing nearly 6 $1,000,000,000 of total contract value and more than $700,000,000 of annualized revenue once these assets are fully ramped. Speaker 300:15:34Looking forward, we have a strong funnel of additional ex scale opportunities, and we look forward to updating you on our future JV partnerships in the near term. For our non financial metrics, MR per cabinet is rising, increasing 7% year over year on a normalized and constant currency basis to $2,287 per cabinet, driven by favorable pricing environments, solid interconnection attach rates and increasing prior densities. As discussed on our last earnings call, as expected, we saw continued pressure on our unadjusted net cabinet spilling metric due to capacity constraints in certain key markets, increasing power density and timing of churn. BackPath unexpectedly announced their immediate liquidation in June, resulting in 300 cabinets churning at quarter end, as an example. Related to cabinet density, the Q2 cabinets churn were at an average density of 4 kilowatts per cabinet, while the new cabinets booked were at an average density of 5.9 kilowatts per cabinet. Speaker 300:16:39In Q2, non ex scale net megawatts sold increased meaningfully compared to Speaker 100:16:45the prior 6 quarters. Speaker 300:16:48As we look forward, given our strong gross bookings and as a result, the rising backlog of cabinets sold but not yet installed, we expect billable cabinets to improve in the second half of the year. On the sustainability front, we're continuing to advance our bold Future First agenda, implementing innovative ways to integrate into the communities in which we operate. This includes new heat export programs across Europe and the Americas, including our new Paris 10 IBX, which helps heat a portion of the aquatic center at the Paris Olympics. This is one example of a sustainability initiative that we believe will become commonplace in the markets we serve in the future. Now let me cover the highlights from the quarter. Speaker 300:17:31Note that all growth rates in this section are on a normalized and constant currency basis. As depicted on Slide 4, global Q2 revenues were $2,159,000,000 up 8% over the same quarter last year and in the upper half of our guidance range on a constant currency basis, including the impact of a one off charge against recurring revenues. As expected, non recurring revenue due to strong exco leasing activity in the quarter. Q2 revenues net of our FX hedges included a $6,000,000 headwind when compared to our prior guidance rates due to the weaker Brazilian real and the Japanese yen in the quarter. Global Q2 adjusted EBITDA was $1,036,000,000 or 48 percent of revenues, up 17% over the same quarter last year above the $1,000,000,000 quarterly threshold for the very first time. Speaker 300:18:26Relative to our expectations, adjusted EBITDA was at the top end of our guidance range due to strong operating profits and timing of spend. Q2 adjusted EBITDA, net of our FX hedges included a $3,000,000 FX headwind when compared to our prior guidance rates and $4,000,000 of integration costs. Global Q2 AFFO was $877,000,000 up 17% over the same quarter last year, better than our expectations due to strong operating performance and the timing of the land lease payment related to our upcoming Singapore 6 build. Q2 AFFO included a $3,000,000 FX headwind when compared to our prior guidance rates. Global Q2 MR churn was 2.3%. Speaker 300:19:11The balance of the year, we expect MR churn to remain in the 2% to 2.5% quarterly guidance range. Turning to our regional highlights, the results which are covered on Slides 5 through 7. On a year over year normalized basis, APAC was our fastest growing region at 11%, followed by the Americas and EMEA regions growing at 9% and 5%, respectively. The Americas region had a great quarter with record gross bookings led by strong financial services activity, firm pricing and a higher mix of medium and large footprint deals. We saw particular strength in our Tier 1 markets, including Dallas, New York, Washington DC. Speaker 300:19:50Our EMEA business delivered a solid quarter with healthy bookings activity and strong pricing. The team did an excellent job selling our global platform with record exports and strong intra region activity, including into our growth and emerging markets such as Abu Dhabi, Istanbul and Warsaw. And finally, the Asia Pacific region had a strong quarter with momentum in our largest markets in the region, including Hong Kong, Singapore and Tokyo, as well as strong customer interest in our new ASEAN metros. Encouragingly, we saw strong intra region activity driven by customers deploying AI workloads in both Japan and Malaysia. And now looking at our capital structure, please refer to Slide 8. Speaker 300:20:37Our balance sheet increased to approximately $33,000,000,000 including an unrestricted balance of $2,000,000,000 Our cash balance increased quarter over quarter due to strong operating cash flow and the debt raised in the quarter, offset by our growth investments and the cash dividend. In May, we raised $750,000,000 of senior U. S. Dollar notes due in 2,034, and we immediately swap these notes into euros at an effective interest rate of 3.9%. Our net leverage remains low relative to our peers at 3.5x our annualized adjusted EBITDA. Speaker 300:21:12Our blended debt borrowing rate is now 2.4%, the lowest in our industry. As noted previously, given the global nature of our business, we plan to opportunistically raise additional debt capital in low rate markets where we intend to expand creating both incremental debt capital to fund our growth, but also placing a natural hedge into these markets. Turning to Slide 9 for the quarter. Capital expenditures were $648,000,000 including recurring CapEx of 45,000,000 dollars We continue to invest across our platform with 54 major projects currently underway in 36 markets and 24 countries, including 15 ex gale projects. Since our last earnings call, we opened 10 projects across 8 metros, including new data centers in Johor, Osaka, Silicon Valley and Warsaw. Speaker 300:22:04We also purchased our Helsinki V and Madrid II assets and land for development in Atlanta, Dallas and Milan. Revenues from owned assets increased to 69% of our recurring revenues and more than 80% of our current retail expansion will be on our own land or own buildings with long term ground leases. Our capital investments delivered strong returns as shown on Slide 10. 180 stabilized assets increased recurring revenues by 4% year over year on a constant currency basis. Stabilized assets were collectively 83% utilized and generated a 26% cash on cash return on the gross PPE invested. Speaker 300:22:46And finally, please refer to Slides 11 through 15 for our updated summary of 2024 guidance and bridges. Do note all growth rates are on a normalized and constant currency basis. For the full year 2024, we're maintaining our underlying revenue outlook with expected top line growth of 7% to 8%. This reflects our solid execution in the first half of the year and a strong pipeline to drive momentum in the second half of the year. We're raising our underlying 2024 adjusted EBITDA guidance by another $15,000,000 due to strong operating performance and lower integration costs. Speaker 300:23:21Are raising our underlying 2024 AFFO guidance by $15,000,000 an 11% to 13% increase over the previous year. AFFO per share is expected to grow between 9% and 11%, at or above the top end of our long term plan as we continue to compound value for our shareholders. And finally, 2024 CapEx is expected to range between $2,800,000,000 $3,100,000,000 including about $240,000,000 of recurring CapEx. So let me stop here. I will turn the call back to Adair. Speaker 200:23:53Thank you, Keith. In closing, we had a strong first half of twenty twenty four. We stand apart from our competitors by seamlessly integrating a global footprint with cutting edge infrastructure. This allows us to effectively address the wide range of opportunities in the era of AI from the training needs of the service providers to the business needs of our enterprise customers. It also positions us to continue to effectively address the broader set of demands of our customer base. Speaker 200:24:26We believe our unwavering commitment to discipline, simplicity and focus, combined with our amplified go to market efforts, will continue to drive growth and deliver higher value for our employees, customers, partners and shareholders. With that, I'll stop here and open it up to questions. Operator00:24:49Thank you. We would now like to open the phone lines for questions. Our first question comes from Simon Flannery from Morgan Stanley. Please go ahead. Speaker 400:25:03Great. Thank you. Good evening. Derek, congratulations on the new position and thank you for the comments on your listening tour and where you see the opportunities. I'd love to get your high level perspective on what led you to take the role at Equinix. Speaker 400:25:19Obviously, you'd known them from the Board, but you came from Google, you'd worked at SAP before that. So you've got a great perspective on the cloud needs of the hyperscalers, the AI opportunities. So it'd be great if you could just put all of that into context on what where you see Equinix being positioned for the training, but particularly for the inference wave of AI? Thank you. Speaker 200:25:43Thanks very much for the question, Simon, and thank you for the kind words. It's certainly been a whirlwind of 10 weeks since I formally took the position and a lot that I've heard and understood during the listening and learning sessions. I have to say I remain exceptionally positive about the opportunity ahead. One of the reasons or one of the main reasons or one of the many reasons actually why I took the role with Equinix is obviously understanding the strategy of the company and its unique position in the ecosystem. I believe that Equinix is uniquely positioned to offer a range of enabling services for our customers so that they can actually capitalize on the opportunities presented by various different technology platforms. Speaker 200:26:41When I think about our demands and the customer needs, it is actually much broader than the AI portfolio. Many of our customers have made a very significant commitment to hybrid and to multi cloud. And as customers become more at ease with cloud as a technology paradigm, we can see many more workload based decisions beginning to occur. So decisions about where particular workloads are best suited. And as I look at this in the context of AI and the AI demand, that initial short term demand is coming indeed from the service providers. Speaker 200:27:25And this is reflected in our Excale business and in the bookings performance that we've seen in the Excale business. And as you heard in our remarks, this is something that we're looking to expand globally. But many CIOs, like during the early days of cloud, are looking to ensure that they have an AI strategy. And we are beginning to see the beginnings of enterprise training and enterprise funnel as we look at customers looking to evolve their strategy into proof of concepts and beyond that into working production systems. As I said, I think retail will have a much broader demand and a more meaningful long term upside from AI as these use cases move from proof of concepts into production. Speaker 200:28:22There is, of course, a lot that Equinix is offering to our customers here, both in our retail business and of course on the ex scale side of the house. And I think this unique balanced approach to the opportunity represented in the broader demand context, but also in the era of journey. Operator00:28:57Next, we'll go to the line of Nick Del Deo from MoffettNathanson. Speaker 500:29:02Hi, afternoon. Again, congratulations there on taking the helm. You had mentioned simplification focus and amplifying go to market as some of the areas that seemed interesting to you initially. I guess, can you expand a little bit on what you saw and things we might see on that front in the coming years? Speaker 200:29:25For sure. Thank you very much again for the congrats, Nick. I appreciate that. First of all, when I look at the overall approach that I will take, it is about creating value and it will always have a customer lens and outside in perspective ensuring that customer success translates and is equal to Equinix success in many regards. When I look at this, this means looking at how we continue to evolve the product portfolio, how we continue to drive critical partnerships so that we're at the center of the digital ecosystem and how we continue to enhance and evolve our go to market engine. Speaker 200:30:08Let me specifically pick up on the notion of simplification. When one simplifies, you bring core processes back to their very core. This enables you to be agile in your response and helps you to accelerate the underpinning pace of the business. And whilst this list is not exhaustive, there are definitely a few areas that I see we have some opportunity to continue to involve in Simplify, things like our quota cash process, elements like our customer life cycle and ways that we can systematize and process the customer's journey with us throughout their life cycle. These type of enterprise grade processes will help us remove friction within the system and help deliver that pace, agility and simplicity. Speaker 200:30:59When I look at it from a focus point of view, it is about understanding not just the footprint that's in our core, but how we continue to grow and evolve our core business to meet the needs of our customers. And this is both in our ex scale business, but also on retail, where we look at how our global footprint enables customers to operate and transact in environments where they may not need to invest in the physical infrastructure themselves to do that. I also think that focus is an important point when we consider our digital services portfolio and look at this through the lens of where we have adjacency and augmenting some of that core functionality that we have that exists in the core footprint of the Equinix data center world. This is a point where we have the right to win, where customers would expect us to lead. And so for instance, I look at the underpinning growth in our fabric business, how important that can be as we look to continue to evolve our virtual interconnections portfolio and this enables us to focus in perhaps on certain aspects of our product portfolio in order to ensure that we are investing where we can have the highest level returns. Speaker 200:32:19And on our go to market side, we have new leadership in our go to market team. I think it's a very important aspect of our business to underpin our go to market processes with a very clear segmentation strategy that allows us to identify those customers that have the highest revenue perspective for us and to manage those customers in a high touch environment, but likewise to enable us to extend our reach through channels and distribution effectively to customers who are in an SME more general business type space. So I hope that's given you a little bit of amplification on simplicity, focus and the actual augmentation of our go to market? Thank you for the question, Nick. Speaker 500:33:07Yes, that was terrific detail. Thank you. Can I follow-up with 1 on interconnection ads? Obviously, they dropped quite a bit sequentially. I think you called out optimization in grooming and content and networking as drivers of that, but also noted strong adds. Speaker 500:33:25So maybe can you just expand a little bit on those puts and Speaker 600:33:25takes and how we should Speaker 500:33:28path to getting interconnection adds back to a healthier and more sustainable level? Speaker 200:33:34Yes. I'm happy to comment on that and I can ask any of my colleagues here to add just if there's anything that they would need to add to my commentary. So first of all, as we noted, we had 3,900 net adds. We had, as Keith mentioned in his comments, the StackPath liquidation, which impacted us negatively 400. And so without that, we would have had 4,300 adds. Speaker 200:34:04Now let me just unpack some of the trends for you, Nick, to build on your question. First on the positive side, when I look at the gross adds, it's the highest level in 2 years. And year to date, this interconnection demand is actually back to peak pandemic levels. In absolute numbers, our A to Z connections continue to increase and we've seen this quarter over quarter. And this is obviously the way that we define unique relationships between companies in the metro. Speaker 200:34:34And I think this really truly speaks to the value of Equinix. So those things coupled together, the gross adds, the absolute number of A to Z continuing to increase, the fact that we're at a peak pandemic levels, I think they're very good indicators of future momentum. Pricing is also trending very favorably. We have 11% spread between churns and new additions, and you see revenue up to 9% year on year on a normalized and constant currency basis. So a number of positives as we look at the interconnection lens. Speaker 200:35:10On the churn side, we saw the churn elevated in 2023 and continued to worsen early 'twenty four and this was up especially in the EMEA theater of operation. I think networks have had the most toughest operating environment and we're continuing to see pressure in that segment of our industry customers. I would also say that M and A affects this, where we have paid cross connects, but unpaid intercompany cross connects and often replacing those in an M and A trajectory and this takes some time for us to work through. But specifically as it relates to EMEA, we can see that the data indicating some decelerating churn rate from the top 10 who have been churning in the past. So that again gives me the confidence to say that I can believe we'll move forward on a positive trajectory here and this is an area of focus for me as we move forward over the course of this quarter. Speaker 500:36:12That's great. Thank you so much. Operator00:36:15Next, we'll go to the line of David Barden from Bank of America. Please go ahead. Speaker 700:36:20Hi, guys. Thank you so much for taking the questions and Adair welcome. I guess I have to be the one to ask. So obviously the DOJ SEC subpoenas continue to kind of be subject of conversation around the company. So I guess if you could kind of give us an update on where we are and what we'll take to put that to bed, it would be great. Speaker 700:36:44Also a follow-up on that is in the aftermath of the conclusion of the independent review conducted by the Board, were there any changes that you guys have made in this past quarter with respect to any kind of internal or external reporting? And then the last one, if I could, Keith, you referenced the unadjusted cabinets. I think this is a 3rd or 4th quarter in a row we've had to talk about why cabinets aren't in volume terms living up to expectations and it's because of the densities and better revenue per cabinet. Where are we on kind of coming up with some language that represents the adjustment that you think investors need to see when they read the release the first time around? Thanks. Speaker 200:37:33Okay. David, thank you very much for the words of welcome. Maybe we'll start with the muted the cabinet growth scenario. I'll throw that to Keith and then he can perhaps comment on the investigation status. Speaker 300:37:46Yes, David. So, yes, 1st and foremost, look, we continue to see the net cabinet billings as an area of high focus. As I said sort of in the prepared remarks, roughly 300 of those cabinets related to StackPath that announced their liquidation at the end of the quarter. Put that aside, there's a number of things that are impacting it. And one of them I'll refer to on why we say unadjusted, but capacity constraints, of course, has continued to have an impact on basically the NetCommas billing and then the timing of churn, which is an obvious statement. Speaker 300:38:22The increasing density continues to be a factor. And as we said, there's 2 things I wanted to pull out for you. And I said in the prepared remarks, but I wanted to make sure that it's understood in its fullest context. First and foremost, we had record gross bookings. So, it gives you a sense that the volume in the businesses is there. Speaker 300:38:41So, that gives me great confidence and we had record gross bookings in the Americas theater more specifically. You add to that, that we had the best net megawatts billing in the retail space. I'm not talking about ex scale and retail. And that in the last 7 quarters, so this is 6 quarters prior we had done meaningfully better than we had done before. So it tells you about the health of the underlying business and really ties into what Adaire was talking about on the sort of gross interconnects. Speaker 300:39:12So there's the volume there, but there's this element of the business both on how things are timing out. We knew as you knew, we're sort of forecasting Q2 would be probably a negative quarter again. There's the timing of the churn. But when I talk about the unadjusted, we do that we can do that math for you, which basically says, well, when you churn out a certain number of cabinets at that level of density and you apply different factors to them, with a higher level of density, you're basically dealing with a whole of roughly 2,000 just because of density. And so that's why we say the unadjusted. Speaker 300:39:50I think the most important thing is that, look, we've given you a good sense of there's great momentum in the business. We're seeing great gross values. Yes, there's an element of churn that's coming through the business. We've been talking about that for many quarters now, the economic climate in which we operate. But overall, the depth of the pipeline and the momentum we see in our business, that's what gives us confidence that you're going to see that abate. Speaker 300:40:16And then the last part I would just say is the backlog has been as high as we've seen in a very long period of time and is substantial. Not a surprise, largely because we did more medium to larger size deals in the quarter. And when you do that, you have some level of extension in the book to bill interval. And therefore, the backlog does creep up as we work to configure those deployments and get them into implementation. So hopefully that answers that question. Speaker 300:40:45And let me then just go to the DOJ, which I think Daryl was going to pass to me anyway. No surprise to you, we're continuing to work with the SEC and the DOJ. It's a process. We're working through that process. We continue to feel very confident in that process and how we're responding to it. Speaker 300:41:05I would like you to draw great comfort from the fact that not only did we file their 10 Q last quarter, but today we filed our 10 Q again today. And so you think about the reinforcement we got from the audit committee's investigation of our financials, you should draw great comfort from it. But like anything, with the short seller report as it comes out and the following subpoenas that came from the SEC and DOJ, we have to respond to it and therefore it is a process. In your question to was there anything that came out of what we want to do differently? I think it was very important when you look at what we announced in May, we were clear that not only did we not have any restatements, but we didn't have any adjustments. Speaker 300:41:50Restatements is a fact about materiality. Adjustment is an adjustment. And so the system is working as it should, which is great. We have the controls. The team does the work. Speaker 300:42:01And overall, we feel very confident about it. But like anything, you obviously are going to step back and reflect that there are other things that we could do that are different. And so that's what the teams, they're looking at all the things that we do and saying, do we do different type of disclosures? You saw us recently talk about the redevelopment of our redevelopment CapEx, which we thought one was a very important disclosure. We had already been planning for it in advance of the short seller report. Speaker 300:42:26So those are the kind of things that we just we make sure that there's appropriate augmentation of policy and disclosure. And I think it puts us in a much better position. But relating to it, is there any adjustments? The answer is no. But we always think that there's things we can do better. Speaker 300:42:40And I'm drawing from a line of 1 of my co CFO, Franz. He always says better, better, never done. So because we're always looking to do better every single quarter and we're never going to be done. So we'll take the advice and guidance from both the counsel and whether anything comes back from DOJ and SEC and we'll get better. But overall, I feel very comfortable in our financial disclosures. Speaker 300:43:03All right, guys. Thank you Speaker 700:43:04so much. Thank you both. Operator00:43:07Next, we'll go to the line of Jim Schneider from Goldman Sachs. Please go ahead. Speaker 800:43:12Good afternoon. Thanks for taking my questions and welcome, Adair. I was wondering if you can maybe extend on your comments earlier about AI workloads moving from service providers to enterprise. Adaire, from your vantage point, how long do you believe it will be before that AI demand becomes more directly material on the enterprise side to Equinix on the sort of conventional retail side? Speaker 200:43:35Yes. Thanks very much, Jim, and thanks for your question and your words of welcome. So I think in the short term, the demand that we're seeing is primarily for training based work loads and this is primarily driven in the short term by cloud and the various different technology partners that we have. And this, as I've mentioned, is how our near term pipeline is being represented and the beneficiary of this in many instances is our XScale business. In the enterprise mid market retail business, we absolutely have AI ready data centers ready to take a customer workloads. Speaker 200:44:23We have already closed a number of transactions where we are running smaller AI based workload scenarios in the training world for enterprise based customers. We are working with many of our CIOs to support their AI strategy as they look to integrate AI into their business and manage their cost whilst they're doing so. And of course, some of our ecosystem partners have created almost a magnetism around Equinix as it relates to AI companies like Coreweave and Lambda that we announced last year in 2023 who have capabilities available today in Equinix data centers and of course the NVIDIA DGX Private Cloud offering that we also announced late in 2023. All of these have very active work pipelines. Some of them have active users who are making use of this system now. Speaker 200:45:30So I'd say that we're seeing early traction in the enterprise level inferencing type workloads beginning to occur in our data center environment, but that is something that we'll see extrapolate and grow over the medium to longer term. Speaker 800:45:48Thanks. And then as a follow-up, last quarter you outlined your plans for your DC-one data center to both modernize and expand capacity. As you look across your portfolio, do you foresee the opportunity to do this more broadly across more facilities? Speaker 300:46:05Yes. I think, Jim, you're referring to our DC2 redevelopment, if I'm not mistaken. Speaker 800:46:09Our DC2, excuse me. Speaker 300:46:11DC2. I just want to make sure. We think the universe of what we call redevelopment projects like that is 5 to 7 ish. They're strategic, they are of scale, they are of size and of great importance. And hence, we are doing those types of redevelopments because of the value that we get to create, introduce more capacity into that highly connected data center and get a good return, not only a good return on both the element of it, which is redevelopment, but also the enhancement aspect of it. Speaker 300:46:45And so overall, the universe isn't massive. We have 264 data centers, as Adair alluded to. We think it's 5 to 7 strategic assets strewn throughout the world that we'll do that too. Speaker 800:47:00Thank you. Operator00:47:04Next, we'll go to the line of Michael Elias from TD Cowen. Please go ahead. Speaker 900:47:09Great. Thanks for taking the questions. And Adaire, congratulations on taking the helm. Maybe to kick things off, one of the things that we've noticed is the differential in densities between what's being churned and what's coming in. As I think through kind of the evolution at the chip level, it seems like there's an acceleration in power consumption there. Speaker 900:47:32Do you view this as a structural trend, I. E, we could be talking about 4 or 5 quarters from now, you taking in cabinets at 7 kW per cab and churning at 4. Thus, this represents increasing headwind to that cabinet number. I guess that's my first question. Just trying to get a sense around, is this going to become a greater and greater headwind? Speaker 200:47:56Yes. 10 weeks in, so this is certainly one of the areas that I've done a little bit of a double click on here. And I can certainly see that there are absolutely some shifting dynamics in the business. And Keith highlighted this increasing power density in the cabs that are churning in versus as you pointed those that are churning out. And for us perhaps this is something where we would look to see the billable cabs as a measure maybe not being as tightly tied to revenue growth as we've seen it in the past. Speaker 200:48:39And that's something that I think we're reflecting on. If I think about our ex scale business, kilowatts probably is a cleaner metric. But when I think about it from retail, our MRR per cab and our billable cabs, that perhaps is the right P times Q map that we have now, even though growth is probably more weighted towards the cabin yield versus the cabin account at this point. And I think that we can continue to supplement that with quarterly insights into how we're seeing the density evolve as our business evolves and as the capabilities within our data centers continue to evolve. So it's certainly something that's a thought process for us here. Speaker 200:49:28I think as Keith mentioned, just to reiterate, I think those very strong gross bookings plus the leading indicator of cabinets sold not yet installed are indicators that we will improve on this number in the second half. Speaker 300:49:44And maybe, Michael, if I can just add on to what Adeir said. Look, I think it's important, as Adeir said, look, we got to keep on looking at it. David asked the question earlier on. We want to be able to respond to it in a way that absolutely makes sense and give you all the statistics at least so you can have the same sort of view that we have. Clearly, the shifting dynamics is more density. Speaker 300:50:07So that's a positive. But I think what's really crux of what is going to come here, if you have more density, your price per unit is going up and you're seeing that in the ARPU or the MR per cabinet. But we're also when we look to monetize the capital that we invest in the business, no surprise to you, we're looking at a return on that investment. Those targeted IRRs are 20% to 30% pre leverage. And so you're seeing the cash on cash yield still deliver. Speaker 300:50:40But that one core metric really feels like it's again, something that I think makes sense to keep on tracking. But we're really going to have to give you other components so that you get the full value of what's going on in the business. But the underlying bias is more density and that's how we're a retail multi tenant data center player and you need to deal with the changing shifts in customer expectations. And that when you go into one of our data centers, you get a real good feel for that the true difference between somebody maybe in one aisle versus somebody in a different aisle. And that tells you like there are shifting dynamics taking place in a really live environment and it is an ecosystem that drives with a propensity to increase density. Speaker 900:51:26Great. Thanks for the color there. And if I could just squeeze one more in. I believe the expectation at the beginning of the year was for churn to step down in the back half. Is that still your expectation? Speaker 900:51:36And maybe as part of that, could you give us a sense for the churn that you're seeing among medium and small sized deployments? Thanks. Speaker 200:51:46Yes. I'll comment on this and then perhaps, Keith, feel free to add. I mean, certainly, we're seeing that our churn in the range of 2% to 2.5%, which is the range that we guided to is something that we can continue to manage to. I think that if we normalized for StackPath in this quarter, we would have been slightly better than our expectations in terms of where we landed. We also have a supply and demand situation in the market, which has a very positive trajectory on pricing. Speaker 200:52:26So maybe this gives us the opportunity thoughtful about managing our overall churn dynamic so that we could selectively use proactive churn to help us drive and improve some yields here. I see that some of the challenges that we had in the first half will still exist at the macro level. There's certainly this need for customers across all industry segments to do more with less. Optimization is still something that customers are looking to do because it does give them that outcome on the more with less tangent. And we definitely have a number of our customers who are in a tougher environment in terms of the industry that they're operating in and the dynamics of that industry. Speaker 200:53:12That being said, we see that we will be managing within our full year as per the guide to the ranges that we set. And then I guess just from a thought process incoming to this, in the world of cloud, this is quite a usual process. I think that there is an opportunity for us to look at some enhancements in terms of management and proactive management early on of our customer engagement with us as it relates to their use profile and intention to churn. And so I think there is a potential for us to lean in and support our customers as they optimize and to engage churn type discussions much earlier in the process than we've been doing thus far. Speaker 300:54:01Michael, maybe I'll just add on one thing, one additional thing, deep. The underlying expectation really is to see our gross booking activity continuing to go up. We expect churn is going to be consistent with how we previously guided, which is important. And then in the Q4, we've already sort of telegraphed, we're working with 1 customer in Singapore that is coming in size that we're asking we're working with them to vacate the premises. We will update you on that by the time we get to the back end of Q3, so on the October call. Speaker 300:54:45But that's the one area that is a planful churn. It was built into our guide. And as I said, it should happen by the end of the year. And that gives us back some very valuable capacity in Singapore that we would like to have put to our use and our Singapore VI asset isn't going to be available till probably sometime in late 'twenty six, I would think, by the time it's up and running. Great. Speaker 300:55:12Thanks for the color. Operator00:55:16Next, we'll go to the line of Michael Rollins from Citi. Please go ahead. Speaker 600:55:21Thanks and good afternoon and Adair, congratulations on the new role. I'd like to get your thoughts on the addressable market for your retail data center services, maybe in a slightly different way. So the deck, the presentation deck sites that you have about 2,000 networks, over 4,800 enterprises and I think about 3,000 cloud and IT service providers. And when you look at the opportunity for future revenue growth, curious how much more room do you have to grow the customers in each of these verticals relative to the opportunity to increase the spend from the customers that you have? Speaker 500:56:03And then Speaker 600:56:04just a follow-up, if I could as well. Keith, just following up some of your comments about second half influences. When we take a look at the constant currency normalized ex PPI revenue growth for the last two quarters, it seems like the first half average was roughly 8%, which is at the high end of the 7% to 8% target for the year. And then you made comments, I think, a few times now on the gross bookings environment, the pipeline. So can you share a bit more of what's happening in the back half of the year that's leaving the annual range at that 7% to 8%? Speaker 600:56:46Thanks. Speaker 200:56:49You want to take that first, Pete? Speaker 300:56:50Yes, sure. You want to do the first one? Speaker 200:56:53Yes, will I take first or you go first? Speaker 300:56:56Why don't I take it? Let me take the second half of the year first, Michael, if I may. Look, it's not lost in you and I'm sure all the other listeners that the business is performing well. The one thing that has been persistent is the although we're comfortable with the range of churn, our ability to guide it has been persistently high and we had a tough Q4 in 2023 and that translates into momentum into 2024. That all said, when you look at this particular quarter, dollars 2,159, there's an element of quarter over quarter currency movement. Speaker 300:57:31We've given you all those numbers. I won't repeat them. We also felt the drag related to energy. As you know, we have going through power price decreases. Then we had this one off large charge to our recurring revenues that we booked in the quarter. Speaker 300:57:50To size it for you is roughly $7,000,000 And so there's a number of things that sort of have affected the sequential movement quarter over quarter and that's on the recurring side of it. There's great variability in the non recurring. We'll do our best to guide you each quarter on what's going on. Suffice it to say, the success in the ex scale business has created some volatility with non recurring and we'll reconcile that and normalize it out for next year as well just so you can truly get the sense of how the underlying business is performing. So all that said, we said that churn would slow down in the second half of the year and our bookings would accelerate. Speaker 300:58:34The pipeline is at the highest level we have ever seen in our business. So that's good. Churn, we have, I think, good visibility to. And as a result, that's the momentum you're seeing that you should see in the business. And so we continue to remain confident. Speaker 300:58:50And as Adair said, despite the macroeconomic conditions, we know they're tough out there. Companies like StackPath, when they hit the wall basically at full speed and just liquidate, it just gives you a sense that some companies aren't doing well out there. But you've got an evolving economic environment. We know our relevance. We know the digital environment is very friendly to Equinix and we know the supply environment is going to continue to get more constrained. Speaker 300:59:15So, the combination of all of that continues to give us the optimism that we have, not only in how we exit the year, but also how we position ourselves for 20 25. And again, you know what our lighthouse metric is, is driving value on a per share basis. That is our whole intention. But we believe we can do that with both good fiscal management and top line growth. So hopefully that gives you the answer that you are looking for. Speaker 200:59:43And perhaps just building on that and to address the first part of the question around the opportunity in our installed base and new market opportunities. This is something that I feel very, very positive about. Not only have we undertaken and already commenced a very deep refresh of our segmentation of our customer base, but in the context of that, we have looked at each of those elements and how we can create sales play scenarios that allow us to have almost like a rinse and repeat model from a selling perspective into a cohort of customers. So very excited about the upsell opportunity as a result of some of those programs in our installed base, but also about the outcomes of the segmentation exercise and the way that we will define our coverage model to enable us to reach further to prospects and bring them into the Equinix family as customers. So a piece of work that's underway and I'm very confident about the prognosis and outcome of that work. Speaker 101:00:59Thank you everyone for joining our call today. This concludes our Q2 call. Operator01:01:04Thank you all for participating in the Equinix 2nd quarter earnings conference call. That concludes today's conference. Please disconnect at this time and have a great rest of your day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallEquinix Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Equinix Earnings HeadlinesEquinix (EQIX) Gains But Lags Market: What You Should KnowApril 25 at 6:12 AM | msn.comEquinix Inc. stock rises Tuesday, still underperforms marketApril 24 at 2:33 AM | marketwatch.comHere’s How to Claim Your Stake in Elon’s Private Company, xAIEven though xAI is a private company, tech legend and angel investor Jeff Brown found a way for everyday folks like you… To partner with Elon on what he believes will be the biggest AI project of the century… Starting with as little as $500.April 25, 2025 | Brownstone Research (Ad)Equinix, Inc. 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There are 10 speakers on the call. Operator00:00:00Good afternoon, and welcome to the Equinix Second 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 objections, please disconnect at this time. I would now like to turn the call over to Chip Newcomb, Senior Director of Investor Relations. Operator00:00:18Thank you. You may begin. Speaker 100:00:21Good afternoon, and welcome to today's conference call. Before we get started, I would like to remind everyone that some of the statements we will be making today are forward looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements and may be affected by the risks we've identified in today's press release and those identified in our filings with the SEC, including our most recent Form 10 ks filed February 16, 2024 and our most recent Form 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 Equinix's policy not to comment on its financial guidance during the quarter unless it's done through an explicit public disclosure. Speaker 100:01:09In addition, we'll provide non GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why the company uses these 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 a presentation designed to accompany this discussion along with certain supplemental financial information and other data. We would also like to remind you that we post important about Equinix on the IR webpage from time to time and encourage you to check our website regularly for the most current available information. With us today are Adaire Fox Martin, Equinix's CEO and President and Keith Taylor, Chief Financial Officer. Speaker 100:01:57Following our prepared remarks, we will be taking questions from sell side analysts. In the interest of wrapping this call up in 1 hour, we'd like to ask these analysts to limit any follow on questions to 1. At this time, I'll turn it over to Adaire. Speaker 200:02:11Thank you, Chip. Good afternoon, and welcome to our Q2 earnings call. I'm honored to be hosting my first earnings call today as CEO and President of Equinix. I'm immensely proud to lead our dedicated team of more than 13,000 employees around the world. I would like to express my gratitude to Charles and the entire Equinix team for the warm welcome and the facilitation of a smooth transition over the past 2 months. Speaker 200:02:41I look forward to the continued partnership with Charles in his role as Executive Chairman, and I'm excited and optimistic about the road ahead. As a Board member for the past 4 years, I've witnessed many of the unique qualities that have driven Equinix's durable success. Our 25 years of investment has built a business now spanning 264 data centers in 72 metros across 6 continents. Our focus on customer value and outcomes has created interconnected digital ecosystems unrivaled in our industry. It is a phenomenal foundation to build upon as CEO. Speaker 200:03:25As the stewards of some of the most important digital infrastructure in the world, we are exceptionally and uniquely positioned to capitalize on the immense opportunities that lie ahead. Business transformation remains a critical priority our customers and the emergence of AI marks a pivotal point for our industry. AI, similar to the growth of cloud technologies a decade ago, will take time to fully develop. In the near term, AI training workloads are driving significant demand, particularly from service providers. Our Excale program continues to be a direct beneficiary of this demand. Speaker 200:04:07We intend to build on this momentum, meaningfully augmenting and extending our ex scale portfolio, particularly in North America. This will complement our robust portfolio across Europe and Asia Pacific. We are excited to share that we recently closed on land and power for our 1st multi 100 Megawatt ExCale campus in Atlanta. We look forward to announcing details of this project and our next ex scale joint venture in the coming months. At the operational end of the AI spectrum, our network nodes and inference workloads. Speaker 200:04:45As with cloud, Equinix continues to be the preferred location for network nodes as customers seek the right connectivity solutions for data ingestion and distribution. We also see inference demand beginning to take shape. We believe the implementation and deployment of these workloads will accelerate over the coming years. The neutrality, global reach and scale of platform Equinix can deliver the performance, network density and cloud adjacency, which inference workloads will require. We are already seeing significant enterprise and service provider interest in our deployment capabilities. Speaker 200:05:28In Q2, we partnered with WWT to serve Alnabic Technologies, an AI powered marketing analytics platform for enterprise. Almavic Technologies deployed their AI infrastructure at Equinix to run proprietary inference algorithms on massive datasets for predictable cost, privacy, speed and secure access to data sources in the cloud. InstaDeep, a leading provider of AI decision making solutions deployed a NVIDIA AI cluster at our Paris 10 asset to access key ecosystems, optimize their network and support their growth objectives. Our approach to the market opportunity created by AI is multifaceted and we believe it will deliver value in the short term and sustainable growth over the medium to long term. Our Excale offering provides the infrastructure and expertise required for massive scalable data center operations for our cloud and large scale technology customers. Speaker 200:06:39For our enterprise and mid market customers, we offer AI ready data centers and turnkey solutions, enabling them to scale efficiently and effectively as they introduce AI technologies into their business operations. For those who require high performance inferencing, our edge solutions handle the data at the edge where it is generated, ensuring optimal performance for the next generation of business applications. Over the past 2 months, I have embarked on a listening tour across a number of our locations, meeting with our customers, partners and employees. And whilst it is still early in my tenure and there is still work that I need to complete, I have noted some areas of opportunity that will underpin our strategy for the company going forward. The opportunity to simplify across numerous aspects of our business. Speaker 200:07:38This will allow us to accelerate our pace of execution. The opportunity to drive more focus. Whilst we may do less, the programs of work that we focus on will represent excellence and execution and deliver the highest quality outcomes. The opportunity to amplify our go to market efforts to delight our customers and energize our partners. Equinix has consistently demonstrated discipline and execution. Speaker 200:08:08This mantra of discipline allows us to deliver market leading returns on capital and serves as the underlying fuel for long term growth in AFFO per share, our core financial metric. Building on this foundation and executing on the opportunities I noted should create a simpler, more focused and ultimately higher valued company. With all of this in mind, I'll turn to our Q2 performance. Equinix had a great second quarter. We delivered record gross bookings. Speaker 200:08:45Our pricing remains strong. We continue to invest broadly across our offerings to further enhance the scale and reach of our industry leading platform. Our delivery of adjusted EBITDA and AFFO per share continues to run ahead of expectations. As you can see on Slide 3, Q2 revenues were $2,200,000,000 up 8% over the same quarter last year. This represents our 86th consecutive quarter of top line growth. Speaker 200:09:21Adjusted EBITDA was up 17% year over year with strong FFO per share flow through. Interconnection revenues stepped up to 9% year over year. These growth rates are all on a normalized and constant currency basis. In May, we announced the opening of our 1st data center in Johor with strong interest from customers across our new Malaysian footprint. In July, we announced our expansion into the Philippines through the planned acquisition of 3 data centers in Manila from Total Information Management. Speaker 200:10:01This transaction valued at approximately $180,000,000 is expected to close in the Q4 of 2024, adding more than 1,000 cabinets of capacity in addition to land for future development. The combination of our strong leadership position in our Singapore hub and our entries into Malaysia, Indonesia and the Philippines strategically position Equinix to help our customers capitalize on the expanding digital opportunity in the fast growing Southeast Asia region. Customers taking advantage of our expanding global footprint include First Digital, an Internet and Telecommunications provider. First Digital is significantly lowering total cost of ownership by building a multi cloud network with Equinix Fabric Cloud Router to connect to Cisco Webex and AWS across all three regions. Our global interconnection franchise continues to perform with over 472,000 total interconnections now deployed. Speaker 200:11:15Gross interconnection additions were at the highest level in 2 years and pricing continues to trend favorably. However, net interconnection adds were 3,900 due to grooming activity primarily in our content and networking verticals. We do expect this grooming to lessen over time. Equinix fabric growth was underpinned by 100 gigabit port additions and strong pull through from other digital services products. Network Edge experienced continued rapid growth with an expansion activity from existing customers. Speaker 200:11:54Key recent interconnection and ecosystem wins include Newham Exchange. This is a new company formed after the integration of the Santiago, Lima and Colombia Stock Exchanges. Capital market participants can now benefit from NUUM's extended reach, low latency and secure connectivity, supported by Equinix in key markets like New York and Sao Paulo. Our channel program delivered another solid quarter accounting for over 30% of new bookings and 55% of company new logos. We continued to see growth from partners like AT and T, Avant, Dell, HPE and Orange Business, with wins across a wide range of industry segments and use cases. Speaker 200:12:45Notable wins included an AI as a service solution via our distribution partner Tech Data and MSP partner Asia Pac. Leveraging a combination of colocation and Equinix Fabric, our partners are delivering an LLM for a high level learning institution based in Malaysia. Now before I turn the call over to Keith, I wanted to recognize that we believe we are in a position of strength financially from both the balance sheet and from an access to capital perspective. Our investment strategy delivers a strong return on invested capital, all of which gives us the flexibility to execute our go forward strategy. With that, I'll turn it over to Keith to cover the results from the quarter. Speaker 300:13:38Great. Thanks Sudhir. Now let me first say, I look forward to the next phase of the Equinix journey alongside you and know it's going to be a very exciting time for all of us at Equinix. Also good afternoon to all of those that are on the call today or whom might be listening later. So to start, we had a great second quarter as the team continued to execute against our plans. Speaker 300:14:01We had record gross bookings, closing more than 4,000 deals with more than 3,000 customers. We continued our trend of net positive pricing actions, and we ended the quarter with solid net bookings. Our forward looking pipeline remains deep, which we expect will drive momentum in the second half of the year, and we're delivering profitability ahead of our expectations. As a result, we're again raising our full year adjusted EBITDA and AFFO guidance and therefore AFFO per share too, our lighthouse metric. Also, as Adair highlighted, I'm excited about the next phase of our ex scale initiative. Speaker 300:14:40We plan to lean into this program as we've seen strong demand from this offering for this offering, as evidenced by both our cloud and AI bookings momentum. We continue to believe this off balance sheet JV structure with our equity partners is the right model to pursue this significant opportunity, which also drives durable value on a per share basis. To date, through the ExxCL JVs, we've invested about $4,700,000,000 in the program. Since our last earnings call, we leased an incremental 17 megawatts of capacity in our Silicon Valley 12 and Paris 13 assets. This brings our total Global Excale Leasing to 3 65 Megawatts, representing nearly 6 $1,000,000,000 of total contract value and more than $700,000,000 of annualized revenue once these assets are fully ramped. Speaker 300:15:34Looking forward, we have a strong funnel of additional ex scale opportunities, and we look forward to updating you on our future JV partnerships in the near term. For our non financial metrics, MR per cabinet is rising, increasing 7% year over year on a normalized and constant currency basis to $2,287 per cabinet, driven by favorable pricing environments, solid interconnection attach rates and increasing prior densities. As discussed on our last earnings call, as expected, we saw continued pressure on our unadjusted net cabinet spilling metric due to capacity constraints in certain key markets, increasing power density and timing of churn. BackPath unexpectedly announced their immediate liquidation in June, resulting in 300 cabinets churning at quarter end, as an example. Related to cabinet density, the Q2 cabinets churn were at an average density of 4 kilowatts per cabinet, while the new cabinets booked were at an average density of 5.9 kilowatts per cabinet. Speaker 300:16:39In Q2, non ex scale net megawatts sold increased meaningfully compared to Speaker 100:16:45the prior 6 quarters. Speaker 300:16:48As we look forward, given our strong gross bookings and as a result, the rising backlog of cabinets sold but not yet installed, we expect billable cabinets to improve in the second half of the year. On the sustainability front, we're continuing to advance our bold Future First agenda, implementing innovative ways to integrate into the communities in which we operate. This includes new heat export programs across Europe and the Americas, including our new Paris 10 IBX, which helps heat a portion of the aquatic center at the Paris Olympics. This is one example of a sustainability initiative that we believe will become commonplace in the markets we serve in the future. Now let me cover the highlights from the quarter. Speaker 300:17:31Note that all growth rates in this section are on a normalized and constant currency basis. As depicted on Slide 4, global Q2 revenues were $2,159,000,000 up 8% over the same quarter last year and in the upper half of our guidance range on a constant currency basis, including the impact of a one off charge against recurring revenues. As expected, non recurring revenue due to strong exco leasing activity in the quarter. Q2 revenues net of our FX hedges included a $6,000,000 headwind when compared to our prior guidance rates due to the weaker Brazilian real and the Japanese yen in the quarter. Global Q2 adjusted EBITDA was $1,036,000,000 or 48 percent of revenues, up 17% over the same quarter last year above the $1,000,000,000 quarterly threshold for the very first time. Speaker 300:18:26Relative to our expectations, adjusted EBITDA was at the top end of our guidance range due to strong operating profits and timing of spend. Q2 adjusted EBITDA, net of our FX hedges included a $3,000,000 FX headwind when compared to our prior guidance rates and $4,000,000 of integration costs. Global Q2 AFFO was $877,000,000 up 17% over the same quarter last year, better than our expectations due to strong operating performance and the timing of the land lease payment related to our upcoming Singapore 6 build. Q2 AFFO included a $3,000,000 FX headwind when compared to our prior guidance rates. Global Q2 MR churn was 2.3%. Speaker 300:19:11The balance of the year, we expect MR churn to remain in the 2% to 2.5% quarterly guidance range. Turning to our regional highlights, the results which are covered on Slides 5 through 7. On a year over year normalized basis, APAC was our fastest growing region at 11%, followed by the Americas and EMEA regions growing at 9% and 5%, respectively. The Americas region had a great quarter with record gross bookings led by strong financial services activity, firm pricing and a higher mix of medium and large footprint deals. We saw particular strength in our Tier 1 markets, including Dallas, New York, Washington DC. Speaker 300:19:50Our EMEA business delivered a solid quarter with healthy bookings activity and strong pricing. The team did an excellent job selling our global platform with record exports and strong intra region activity, including into our growth and emerging markets such as Abu Dhabi, Istanbul and Warsaw. And finally, the Asia Pacific region had a strong quarter with momentum in our largest markets in the region, including Hong Kong, Singapore and Tokyo, as well as strong customer interest in our new ASEAN metros. Encouragingly, we saw strong intra region activity driven by customers deploying AI workloads in both Japan and Malaysia. And now looking at our capital structure, please refer to Slide 8. Speaker 300:20:37Our balance sheet increased to approximately $33,000,000,000 including an unrestricted balance of $2,000,000,000 Our cash balance increased quarter over quarter due to strong operating cash flow and the debt raised in the quarter, offset by our growth investments and the cash dividend. In May, we raised $750,000,000 of senior U. S. Dollar notes due in 2,034, and we immediately swap these notes into euros at an effective interest rate of 3.9%. Our net leverage remains low relative to our peers at 3.5x our annualized adjusted EBITDA. Speaker 300:21:12Our blended debt borrowing rate is now 2.4%, the lowest in our industry. As noted previously, given the global nature of our business, we plan to opportunistically raise additional debt capital in low rate markets where we intend to expand creating both incremental debt capital to fund our growth, but also placing a natural hedge into these markets. Turning to Slide 9 for the quarter. Capital expenditures were $648,000,000 including recurring CapEx of 45,000,000 dollars We continue to invest across our platform with 54 major projects currently underway in 36 markets and 24 countries, including 15 ex gale projects. Since our last earnings call, we opened 10 projects across 8 metros, including new data centers in Johor, Osaka, Silicon Valley and Warsaw. Speaker 300:22:04We also purchased our Helsinki V and Madrid II assets and land for development in Atlanta, Dallas and Milan. Revenues from owned assets increased to 69% of our recurring revenues and more than 80% of our current retail expansion will be on our own land or own buildings with long term ground leases. Our capital investments delivered strong returns as shown on Slide 10. 180 stabilized assets increased recurring revenues by 4% year over year on a constant currency basis. Stabilized assets were collectively 83% utilized and generated a 26% cash on cash return on the gross PPE invested. Speaker 300:22:46And finally, please refer to Slides 11 through 15 for our updated summary of 2024 guidance and bridges. Do note all growth rates are on a normalized and constant currency basis. For the full year 2024, we're maintaining our underlying revenue outlook with expected top line growth of 7% to 8%. This reflects our solid execution in the first half of the year and a strong pipeline to drive momentum in the second half of the year. We're raising our underlying 2024 adjusted EBITDA guidance by another $15,000,000 due to strong operating performance and lower integration costs. Speaker 300:23:21Are raising our underlying 2024 AFFO guidance by $15,000,000 an 11% to 13% increase over the previous year. AFFO per share is expected to grow between 9% and 11%, at or above the top end of our long term plan as we continue to compound value for our shareholders. And finally, 2024 CapEx is expected to range between $2,800,000,000 $3,100,000,000 including about $240,000,000 of recurring CapEx. So let me stop here. I will turn the call back to Adair. Speaker 200:23:53Thank you, Keith. In closing, we had a strong first half of twenty twenty four. We stand apart from our competitors by seamlessly integrating a global footprint with cutting edge infrastructure. This allows us to effectively address the wide range of opportunities in the era of AI from the training needs of the service providers to the business needs of our enterprise customers. It also positions us to continue to effectively address the broader set of demands of our customer base. Speaker 200:24:26We believe our unwavering commitment to discipline, simplicity and focus, combined with our amplified go to market efforts, will continue to drive growth and deliver higher value for our employees, customers, partners and shareholders. With that, I'll stop here and open it up to questions. Operator00:24:49Thank you. We would now like to open the phone lines for questions. Our first question comes from Simon Flannery from Morgan Stanley. Please go ahead. Speaker 400:25:03Great. Thank you. Good evening. Derek, congratulations on the new position and thank you for the comments on your listening tour and where you see the opportunities. I'd love to get your high level perspective on what led you to take the role at Equinix. Speaker 400:25:19Obviously, you'd known them from the Board, but you came from Google, you'd worked at SAP before that. So you've got a great perspective on the cloud needs of the hyperscalers, the AI opportunities. So it'd be great if you could just put all of that into context on what where you see Equinix being positioned for the training, but particularly for the inference wave of AI? Thank you. Speaker 200:25:43Thanks very much for the question, Simon, and thank you for the kind words. It's certainly been a whirlwind of 10 weeks since I formally took the position and a lot that I've heard and understood during the listening and learning sessions. I have to say I remain exceptionally positive about the opportunity ahead. One of the reasons or one of the main reasons or one of the many reasons actually why I took the role with Equinix is obviously understanding the strategy of the company and its unique position in the ecosystem. I believe that Equinix is uniquely positioned to offer a range of enabling services for our customers so that they can actually capitalize on the opportunities presented by various different technology platforms. Speaker 200:26:41When I think about our demands and the customer needs, it is actually much broader than the AI portfolio. Many of our customers have made a very significant commitment to hybrid and to multi cloud. And as customers become more at ease with cloud as a technology paradigm, we can see many more workload based decisions beginning to occur. So decisions about where particular workloads are best suited. And as I look at this in the context of AI and the AI demand, that initial short term demand is coming indeed from the service providers. Speaker 200:27:25And this is reflected in our Excale business and in the bookings performance that we've seen in the Excale business. And as you heard in our remarks, this is something that we're looking to expand globally. But many CIOs, like during the early days of cloud, are looking to ensure that they have an AI strategy. And we are beginning to see the beginnings of enterprise training and enterprise funnel as we look at customers looking to evolve their strategy into proof of concepts and beyond that into working production systems. As I said, I think retail will have a much broader demand and a more meaningful long term upside from AI as these use cases move from proof of concepts into production. Speaker 200:28:22There is, of course, a lot that Equinix is offering to our customers here, both in our retail business and of course on the ex scale side of the house. And I think this unique balanced approach to the opportunity represented in the broader demand context, but also in the era of journey. Operator00:28:57Next, we'll go to the line of Nick Del Deo from MoffettNathanson. Speaker 500:29:02Hi, afternoon. Again, congratulations there on taking the helm. You had mentioned simplification focus and amplifying go to market as some of the areas that seemed interesting to you initially. I guess, can you expand a little bit on what you saw and things we might see on that front in the coming years? Speaker 200:29:25For sure. Thank you very much again for the congrats, Nick. I appreciate that. First of all, when I look at the overall approach that I will take, it is about creating value and it will always have a customer lens and outside in perspective ensuring that customer success translates and is equal to Equinix success in many regards. When I look at this, this means looking at how we continue to evolve the product portfolio, how we continue to drive critical partnerships so that we're at the center of the digital ecosystem and how we continue to enhance and evolve our go to market engine. Speaker 200:30:08Let me specifically pick up on the notion of simplification. When one simplifies, you bring core processes back to their very core. This enables you to be agile in your response and helps you to accelerate the underpinning pace of the business. And whilst this list is not exhaustive, there are definitely a few areas that I see we have some opportunity to continue to involve in Simplify, things like our quota cash process, elements like our customer life cycle and ways that we can systematize and process the customer's journey with us throughout their life cycle. These type of enterprise grade processes will help us remove friction within the system and help deliver that pace, agility and simplicity. Speaker 200:30:59When I look at it from a focus point of view, it is about understanding not just the footprint that's in our core, but how we continue to grow and evolve our core business to meet the needs of our customers. And this is both in our ex scale business, but also on retail, where we look at how our global footprint enables customers to operate and transact in environments where they may not need to invest in the physical infrastructure themselves to do that. I also think that focus is an important point when we consider our digital services portfolio and look at this through the lens of where we have adjacency and augmenting some of that core functionality that we have that exists in the core footprint of the Equinix data center world. This is a point where we have the right to win, where customers would expect us to lead. And so for instance, I look at the underpinning growth in our fabric business, how important that can be as we look to continue to evolve our virtual interconnections portfolio and this enables us to focus in perhaps on certain aspects of our product portfolio in order to ensure that we are investing where we can have the highest level returns. Speaker 200:32:19And on our go to market side, we have new leadership in our go to market team. I think it's a very important aspect of our business to underpin our go to market processes with a very clear segmentation strategy that allows us to identify those customers that have the highest revenue perspective for us and to manage those customers in a high touch environment, but likewise to enable us to extend our reach through channels and distribution effectively to customers who are in an SME more general business type space. So I hope that's given you a little bit of amplification on simplicity, focus and the actual augmentation of our go to market? Thank you for the question, Nick. Speaker 500:33:07Yes, that was terrific detail. Thank you. Can I follow-up with 1 on interconnection ads? Obviously, they dropped quite a bit sequentially. I think you called out optimization in grooming and content and networking as drivers of that, but also noted strong adds. Speaker 500:33:25So maybe can you just expand a little bit on those puts and Speaker 600:33:25takes and how we should Speaker 500:33:28path to getting interconnection adds back to a healthier and more sustainable level? Speaker 200:33:34Yes. I'm happy to comment on that and I can ask any of my colleagues here to add just if there's anything that they would need to add to my commentary. So first of all, as we noted, we had 3,900 net adds. We had, as Keith mentioned in his comments, the StackPath liquidation, which impacted us negatively 400. And so without that, we would have had 4,300 adds. Speaker 200:34:04Now let me just unpack some of the trends for you, Nick, to build on your question. First on the positive side, when I look at the gross adds, it's the highest level in 2 years. And year to date, this interconnection demand is actually back to peak pandemic levels. In absolute numbers, our A to Z connections continue to increase and we've seen this quarter over quarter. And this is obviously the way that we define unique relationships between companies in the metro. Speaker 200:34:34And I think this really truly speaks to the value of Equinix. So those things coupled together, the gross adds, the absolute number of A to Z continuing to increase, the fact that we're at a peak pandemic levels, I think they're very good indicators of future momentum. Pricing is also trending very favorably. We have 11% spread between churns and new additions, and you see revenue up to 9% year on year on a normalized and constant currency basis. So a number of positives as we look at the interconnection lens. Speaker 200:35:10On the churn side, we saw the churn elevated in 2023 and continued to worsen early 'twenty four and this was up especially in the EMEA theater of operation. I think networks have had the most toughest operating environment and we're continuing to see pressure in that segment of our industry customers. I would also say that M and A affects this, where we have paid cross connects, but unpaid intercompany cross connects and often replacing those in an M and A trajectory and this takes some time for us to work through. But specifically as it relates to EMEA, we can see that the data indicating some decelerating churn rate from the top 10 who have been churning in the past. So that again gives me the confidence to say that I can believe we'll move forward on a positive trajectory here and this is an area of focus for me as we move forward over the course of this quarter. Speaker 500:36:12That's great. Thank you so much. Operator00:36:15Next, we'll go to the line of David Barden from Bank of America. Please go ahead. Speaker 700:36:20Hi, guys. Thank you so much for taking the questions and Adair welcome. I guess I have to be the one to ask. So obviously the DOJ SEC subpoenas continue to kind of be subject of conversation around the company. So I guess if you could kind of give us an update on where we are and what we'll take to put that to bed, it would be great. Speaker 700:36:44Also a follow-up on that is in the aftermath of the conclusion of the independent review conducted by the Board, were there any changes that you guys have made in this past quarter with respect to any kind of internal or external reporting? And then the last one, if I could, Keith, you referenced the unadjusted cabinets. I think this is a 3rd or 4th quarter in a row we've had to talk about why cabinets aren't in volume terms living up to expectations and it's because of the densities and better revenue per cabinet. Where are we on kind of coming up with some language that represents the adjustment that you think investors need to see when they read the release the first time around? Thanks. Speaker 200:37:33Okay. David, thank you very much for the words of welcome. Maybe we'll start with the muted the cabinet growth scenario. I'll throw that to Keith and then he can perhaps comment on the investigation status. Speaker 300:37:46Yes, David. So, yes, 1st and foremost, look, we continue to see the net cabinet billings as an area of high focus. As I said sort of in the prepared remarks, roughly 300 of those cabinets related to StackPath that announced their liquidation at the end of the quarter. Put that aside, there's a number of things that are impacting it. And one of them I'll refer to on why we say unadjusted, but capacity constraints, of course, has continued to have an impact on basically the NetCommas billing and then the timing of churn, which is an obvious statement. Speaker 300:38:22The increasing density continues to be a factor. And as we said, there's 2 things I wanted to pull out for you. And I said in the prepared remarks, but I wanted to make sure that it's understood in its fullest context. First and foremost, we had record gross bookings. So, it gives you a sense that the volume in the businesses is there. Speaker 300:38:41So, that gives me great confidence and we had record gross bookings in the Americas theater more specifically. You add to that, that we had the best net megawatts billing in the retail space. I'm not talking about ex scale and retail. And that in the last 7 quarters, so this is 6 quarters prior we had done meaningfully better than we had done before. So it tells you about the health of the underlying business and really ties into what Adaire was talking about on the sort of gross interconnects. Speaker 300:39:12So there's the volume there, but there's this element of the business both on how things are timing out. We knew as you knew, we're sort of forecasting Q2 would be probably a negative quarter again. There's the timing of the churn. But when I talk about the unadjusted, we do that we can do that math for you, which basically says, well, when you churn out a certain number of cabinets at that level of density and you apply different factors to them, with a higher level of density, you're basically dealing with a whole of roughly 2,000 just because of density. And so that's why we say the unadjusted. Speaker 300:39:50I think the most important thing is that, look, we've given you a good sense of there's great momentum in the business. We're seeing great gross values. Yes, there's an element of churn that's coming through the business. We've been talking about that for many quarters now, the economic climate in which we operate. But overall, the depth of the pipeline and the momentum we see in our business, that's what gives us confidence that you're going to see that abate. Speaker 300:40:16And then the last part I would just say is the backlog has been as high as we've seen in a very long period of time and is substantial. Not a surprise, largely because we did more medium to larger size deals in the quarter. And when you do that, you have some level of extension in the book to bill interval. And therefore, the backlog does creep up as we work to configure those deployments and get them into implementation. So hopefully that answers that question. Speaker 300:40:45And let me then just go to the DOJ, which I think Daryl was going to pass to me anyway. No surprise to you, we're continuing to work with the SEC and the DOJ. It's a process. We're working through that process. We continue to feel very confident in that process and how we're responding to it. Speaker 300:41:05I would like you to draw great comfort from the fact that not only did we file their 10 Q last quarter, but today we filed our 10 Q again today. And so you think about the reinforcement we got from the audit committee's investigation of our financials, you should draw great comfort from it. But like anything, with the short seller report as it comes out and the following subpoenas that came from the SEC and DOJ, we have to respond to it and therefore it is a process. In your question to was there anything that came out of what we want to do differently? I think it was very important when you look at what we announced in May, we were clear that not only did we not have any restatements, but we didn't have any adjustments. Speaker 300:41:50Restatements is a fact about materiality. Adjustment is an adjustment. And so the system is working as it should, which is great. We have the controls. The team does the work. Speaker 300:42:01And overall, we feel very confident about it. But like anything, you obviously are going to step back and reflect that there are other things that we could do that are different. And so that's what the teams, they're looking at all the things that we do and saying, do we do different type of disclosures? You saw us recently talk about the redevelopment of our redevelopment CapEx, which we thought one was a very important disclosure. We had already been planning for it in advance of the short seller report. Speaker 300:42:26So those are the kind of things that we just we make sure that there's appropriate augmentation of policy and disclosure. And I think it puts us in a much better position. But relating to it, is there any adjustments? The answer is no. But we always think that there's things we can do better. Speaker 300:42:40And I'm drawing from a line of 1 of my co CFO, Franz. He always says better, better, never done. So because we're always looking to do better every single quarter and we're never going to be done. So we'll take the advice and guidance from both the counsel and whether anything comes back from DOJ and SEC and we'll get better. But overall, I feel very comfortable in our financial disclosures. Speaker 300:43:03All right, guys. Thank you Speaker 700:43:04so much. Thank you both. Operator00:43:07Next, we'll go to the line of Jim Schneider from Goldman Sachs. Please go ahead. Speaker 800:43:12Good afternoon. Thanks for taking my questions and welcome, Adair. I was wondering if you can maybe extend on your comments earlier about AI workloads moving from service providers to enterprise. Adaire, from your vantage point, how long do you believe it will be before that AI demand becomes more directly material on the enterprise side to Equinix on the sort of conventional retail side? Speaker 200:43:35Yes. Thanks very much, Jim, and thanks for your question and your words of welcome. So I think in the short term, the demand that we're seeing is primarily for training based work loads and this is primarily driven in the short term by cloud and the various different technology partners that we have. And this, as I've mentioned, is how our near term pipeline is being represented and the beneficiary of this in many instances is our XScale business. In the enterprise mid market retail business, we absolutely have AI ready data centers ready to take a customer workloads. Speaker 200:44:23We have already closed a number of transactions where we are running smaller AI based workload scenarios in the training world for enterprise based customers. We are working with many of our CIOs to support their AI strategy as they look to integrate AI into their business and manage their cost whilst they're doing so. And of course, some of our ecosystem partners have created almost a magnetism around Equinix as it relates to AI companies like Coreweave and Lambda that we announced last year in 2023 who have capabilities available today in Equinix data centers and of course the NVIDIA DGX Private Cloud offering that we also announced late in 2023. All of these have very active work pipelines. Some of them have active users who are making use of this system now. Speaker 200:45:30So I'd say that we're seeing early traction in the enterprise level inferencing type workloads beginning to occur in our data center environment, but that is something that we'll see extrapolate and grow over the medium to longer term. Speaker 800:45:48Thanks. And then as a follow-up, last quarter you outlined your plans for your DC-one data center to both modernize and expand capacity. As you look across your portfolio, do you foresee the opportunity to do this more broadly across more facilities? Speaker 300:46:05Yes. I think, Jim, you're referring to our DC2 redevelopment, if I'm not mistaken. Speaker 800:46:09Our DC2, excuse me. Speaker 300:46:11DC2. I just want to make sure. We think the universe of what we call redevelopment projects like that is 5 to 7 ish. They're strategic, they are of scale, they are of size and of great importance. And hence, we are doing those types of redevelopments because of the value that we get to create, introduce more capacity into that highly connected data center and get a good return, not only a good return on both the element of it, which is redevelopment, but also the enhancement aspect of it. Speaker 300:46:45And so overall, the universe isn't massive. We have 264 data centers, as Adair alluded to. We think it's 5 to 7 strategic assets strewn throughout the world that we'll do that too. Speaker 800:47:00Thank you. Operator00:47:04Next, we'll go to the line of Michael Elias from TD Cowen. Please go ahead. Speaker 900:47:09Great. Thanks for taking the questions. And Adaire, congratulations on taking the helm. Maybe to kick things off, one of the things that we've noticed is the differential in densities between what's being churned and what's coming in. As I think through kind of the evolution at the chip level, it seems like there's an acceleration in power consumption there. Speaker 900:47:32Do you view this as a structural trend, I. E, we could be talking about 4 or 5 quarters from now, you taking in cabinets at 7 kW per cab and churning at 4. Thus, this represents increasing headwind to that cabinet number. I guess that's my first question. Just trying to get a sense around, is this going to become a greater and greater headwind? Speaker 200:47:56Yes. 10 weeks in, so this is certainly one of the areas that I've done a little bit of a double click on here. And I can certainly see that there are absolutely some shifting dynamics in the business. And Keith highlighted this increasing power density in the cabs that are churning in versus as you pointed those that are churning out. And for us perhaps this is something where we would look to see the billable cabs as a measure maybe not being as tightly tied to revenue growth as we've seen it in the past. Speaker 200:48:39And that's something that I think we're reflecting on. If I think about our ex scale business, kilowatts probably is a cleaner metric. But when I think about it from retail, our MRR per cab and our billable cabs, that perhaps is the right P times Q map that we have now, even though growth is probably more weighted towards the cabin yield versus the cabin account at this point. And I think that we can continue to supplement that with quarterly insights into how we're seeing the density evolve as our business evolves and as the capabilities within our data centers continue to evolve. So it's certainly something that's a thought process for us here. Speaker 200:49:28I think as Keith mentioned, just to reiterate, I think those very strong gross bookings plus the leading indicator of cabinets sold not yet installed are indicators that we will improve on this number in the second half. Speaker 300:49:44And maybe, Michael, if I can just add on to what Adeir said. Look, I think it's important, as Adeir said, look, we got to keep on looking at it. David asked the question earlier on. We want to be able to respond to it in a way that absolutely makes sense and give you all the statistics at least so you can have the same sort of view that we have. Clearly, the shifting dynamics is more density. Speaker 300:50:07So that's a positive. But I think what's really crux of what is going to come here, if you have more density, your price per unit is going up and you're seeing that in the ARPU or the MR per cabinet. But we're also when we look to monetize the capital that we invest in the business, no surprise to you, we're looking at a return on that investment. Those targeted IRRs are 20% to 30% pre leverage. And so you're seeing the cash on cash yield still deliver. Speaker 300:50:40But that one core metric really feels like it's again, something that I think makes sense to keep on tracking. But we're really going to have to give you other components so that you get the full value of what's going on in the business. But the underlying bias is more density and that's how we're a retail multi tenant data center player and you need to deal with the changing shifts in customer expectations. And that when you go into one of our data centers, you get a real good feel for that the true difference between somebody maybe in one aisle versus somebody in a different aisle. And that tells you like there are shifting dynamics taking place in a really live environment and it is an ecosystem that drives with a propensity to increase density. Speaker 900:51:26Great. Thanks for the color there. And if I could just squeeze one more in. I believe the expectation at the beginning of the year was for churn to step down in the back half. Is that still your expectation? Speaker 900:51:36And maybe as part of that, could you give us a sense for the churn that you're seeing among medium and small sized deployments? Thanks. Speaker 200:51:46Yes. I'll comment on this and then perhaps, Keith, feel free to add. I mean, certainly, we're seeing that our churn in the range of 2% to 2.5%, which is the range that we guided to is something that we can continue to manage to. I think that if we normalized for StackPath in this quarter, we would have been slightly better than our expectations in terms of where we landed. We also have a supply and demand situation in the market, which has a very positive trajectory on pricing. Speaker 200:52:26So maybe this gives us the opportunity thoughtful about managing our overall churn dynamic so that we could selectively use proactive churn to help us drive and improve some yields here. I see that some of the challenges that we had in the first half will still exist at the macro level. There's certainly this need for customers across all industry segments to do more with less. Optimization is still something that customers are looking to do because it does give them that outcome on the more with less tangent. And we definitely have a number of our customers who are in a tougher environment in terms of the industry that they're operating in and the dynamics of that industry. Speaker 200:53:12That being said, we see that we will be managing within our full year as per the guide to the ranges that we set. And then I guess just from a thought process incoming to this, in the world of cloud, this is quite a usual process. I think that there is an opportunity for us to look at some enhancements in terms of management and proactive management early on of our customer engagement with us as it relates to their use profile and intention to churn. And so I think there is a potential for us to lean in and support our customers as they optimize and to engage churn type discussions much earlier in the process than we've been doing thus far. Speaker 300:54:01Michael, maybe I'll just add on one thing, one additional thing, deep. The underlying expectation really is to see our gross booking activity continuing to go up. We expect churn is going to be consistent with how we previously guided, which is important. And then in the Q4, we've already sort of telegraphed, we're working with 1 customer in Singapore that is coming in size that we're asking we're working with them to vacate the premises. We will update you on that by the time we get to the back end of Q3, so on the October call. Speaker 300:54:45But that's the one area that is a planful churn. It was built into our guide. And as I said, it should happen by the end of the year. And that gives us back some very valuable capacity in Singapore that we would like to have put to our use and our Singapore VI asset isn't going to be available till probably sometime in late 'twenty six, I would think, by the time it's up and running. Great. Speaker 300:55:12Thanks for the color. Operator00:55:16Next, we'll go to the line of Michael Rollins from Citi. Please go ahead. Speaker 600:55:21Thanks and good afternoon and Adair, congratulations on the new role. I'd like to get your thoughts on the addressable market for your retail data center services, maybe in a slightly different way. So the deck, the presentation deck sites that you have about 2,000 networks, over 4,800 enterprises and I think about 3,000 cloud and IT service providers. And when you look at the opportunity for future revenue growth, curious how much more room do you have to grow the customers in each of these verticals relative to the opportunity to increase the spend from the customers that you have? Speaker 500:56:03And then Speaker 600:56:04just a follow-up, if I could as well. Keith, just following up some of your comments about second half influences. When we take a look at the constant currency normalized ex PPI revenue growth for the last two quarters, it seems like the first half average was roughly 8%, which is at the high end of the 7% to 8% target for the year. And then you made comments, I think, a few times now on the gross bookings environment, the pipeline. So can you share a bit more of what's happening in the back half of the year that's leaving the annual range at that 7% to 8%? Speaker 600:56:46Thanks. Speaker 200:56:49You want to take that first, Pete? Speaker 300:56:50Yes, sure. You want to do the first one? Speaker 200:56:53Yes, will I take first or you go first? Speaker 300:56:56Why don't I take it? Let me take the second half of the year first, Michael, if I may. Look, it's not lost in you and I'm sure all the other listeners that the business is performing well. The one thing that has been persistent is the although we're comfortable with the range of churn, our ability to guide it has been persistently high and we had a tough Q4 in 2023 and that translates into momentum into 2024. That all said, when you look at this particular quarter, dollars 2,159, there's an element of quarter over quarter currency movement. Speaker 300:57:31We've given you all those numbers. I won't repeat them. We also felt the drag related to energy. As you know, we have going through power price decreases. Then we had this one off large charge to our recurring revenues that we booked in the quarter. Speaker 300:57:50To size it for you is roughly $7,000,000 And so there's a number of things that sort of have affected the sequential movement quarter over quarter and that's on the recurring side of it. There's great variability in the non recurring. We'll do our best to guide you each quarter on what's going on. Suffice it to say, the success in the ex scale business has created some volatility with non recurring and we'll reconcile that and normalize it out for next year as well just so you can truly get the sense of how the underlying business is performing. So all that said, we said that churn would slow down in the second half of the year and our bookings would accelerate. Speaker 300:58:34The pipeline is at the highest level we have ever seen in our business. So that's good. Churn, we have, I think, good visibility to. And as a result, that's the momentum you're seeing that you should see in the business. And so we continue to remain confident. Speaker 300:58:50And as Adair said, despite the macroeconomic conditions, we know they're tough out there. Companies like StackPath, when they hit the wall basically at full speed and just liquidate, it just gives you a sense that some companies aren't doing well out there. But you've got an evolving economic environment. We know our relevance. We know the digital environment is very friendly to Equinix and we know the supply environment is going to continue to get more constrained. Speaker 300:59:15So, the combination of all of that continues to give us the optimism that we have, not only in how we exit the year, but also how we position ourselves for 20 25. And again, you know what our lighthouse metric is, is driving value on a per share basis. That is our whole intention. But we believe we can do that with both good fiscal management and top line growth. So hopefully that gives you the answer that you are looking for. Speaker 200:59:43And perhaps just building on that and to address the first part of the question around the opportunity in our installed base and new market opportunities. This is something that I feel very, very positive about. Not only have we undertaken and already commenced a very deep refresh of our segmentation of our customer base, but in the context of that, we have looked at each of those elements and how we can create sales play scenarios that allow us to have almost like a rinse and repeat model from a selling perspective into a cohort of customers. So very excited about the upsell opportunity as a result of some of those programs in our installed base, but also about the outcomes of the segmentation exercise and the way that we will define our coverage model to enable us to reach further to prospects and bring them into the Equinix family as customers. So a piece of work that's underway and I'm very confident about the prognosis and outcome of that work. Speaker 101:00:59Thank you everyone for joining our call today. This concludes our Q2 call. Operator01:01:04Thank you all for participating in the Equinix 2nd quarter earnings conference call. That concludes today's conference. 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