Digital Realty Trust, Inc. Q4 FY2025 earnings call

• Posted strong financial results with core FFO per share up 10% in 2025. - Concluded second consecutive year with over a billion dollars of total bookings, leaving a record backlog of nearly $1.4 billion. - Zero to one megawatt plus interconnection bookings were a full-year record in 2025. - PlatformDigital expanded to 31 countries and 56 markets at year-end. - Service Fabric adoption accelerated, enabling access to over 300 cloud on-ramps and more than 700 interconnected data centers. - Added nearly 600 new logos for the second consecutive year. - Expanded footprint in APAC with acquisitions in Indonesia and Malaysia. - Highlighted recent customer wins leveraging their connectivity for critical workloads.

In the fourth quarter, Digital Realty Trust posted $1.86 of core FFO per share, and $7.39 for the full year 2025, up 10% over 2024. The zero to one megawatt plus interconnection product set had nearly $340 million of bookings in 2025, a full-year record and 35% above 2024 levels. Hyperscale leasing exceeded $800 million in 2025 on a 100% share basis. Core FFO per share growth was 8% year over year in Q4 2025, and same capital cash NOI grew 8.6% year over year in the fourth quarter, driven by 8.2% growth in data center revenue.

• Core FFO guidance for 2026 is $7.90 to $8 per share, midpoint represents 8% year-over-year growth. - Anticipates total revenue and adjusted EBITDA growth of more than 10% in 2026 on a normalized and constant currency basis. - Same capital cash NOI growth expected to be 4% to 5% on a constant currency basis. - Cash renewal spreads expected to be between 6% to 8%. - CapEx net of partner contributions expected to rise to between $3.25 billion and $3.75 billion. - Expect to recycle $500 million to a billion dollars of dispositions and JV capital this year.

• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. - Risks related to the business are discussed in the 10-K and subsequent SEC filings.

Q: Eric Luebchow from Wells Fargo asked about hyperscaler bookings and key campuses for large footprint demand.

A: Andrew P. Power responded discussing hyperscaler activity in The Americas, including Northern Virginia, Charlotte, Atlanta, Dallas, and globalization of demand with contributions from Europe, and that customers are looking further out for power.

Q: Michael Rollins from Citi asked about inference scaling in 2026.

A: Andrew P. Power mentioned inference scaling playing out in hyperscale and enterprise business, with dialogue on cloud and AI designs in buildings, and enterprise business having a strong year with growth in the zero to one megawatt interconnection category.

Q: Timothy Horan from Oppenheimer asked about hyperscale CapEx and bottlenecks.

A: Andrew P. Power and Colin McLean discussed hyperscale interest, continuous blocks of capacity for hyperscale partners, and bottlenecks related to labor and build costs, emphasizing picking spots for greatest value to customers.

Q: Richard Choe from JPMorgan asked about recurring CapEx and capitalized leasing costs.

A: Matthew R. Mercier explained that the increase in 2026 is a carryover of projects not completed in 2025 and building out for strong enterprise leasing, with it being around 7% of revenue, in line with industry metrics.

Q: Irvin Liu from Evercore ISI asked about timing of developable capacity availability.

A: Andrew P. Power stated that the schedule is consistent like a conveyor belt, with projects delivered often ahead of schedule and continuing to replenish capacity, making it attractive for customers.

Q: Aryeh Klein from BMO Capital Markets asked about strength in zero to one business and deal size evolution.

A: Colin McLean responded that the zero to one business had a record quarter in Q4, with strong contributions from new logos and channel, taking market share with focus on execution, and deal sizes evolving with more enterprises having larger pieces of their pie in high-density solutions.

Q: Frank Louthan from Raymond James asked about capacity availability beyond 2026 and labor for growth.

A: Andrew P. Power discussed that they have security around workforce and supply chain for development projects, labor being challenging, but they are attractive partners, and 2027 and 2028 have attractive demand with rational supply.

Q: Nick Del Deo from MoffettNathanson asked about disconnect between public and private data center valuations.

A: Gregory Wright explained that it depends on asset mix, and Digital Realty is evolving its funding strategy with a successful initial fund and strong liquidity to support growth, highlighting record backlog and strong execution.

Q: Jonathan Petersen from Jefferies asked about investments in Malaysia, Israel, and Portugal.

A: Gregory Wright discussed that acquisitions are a key component of growth strategy, with investments in highly connected assets in these markets to support interconnection and enterprise customers, and strategic acquisitions in The US for hyperscale support.

Q: John Hodulik from UBS asked about large footprint sites in remote power-capable markets and data center impact on electric rates.

A: Andrew P. Power mentioned strategic acquisitions in cloud zonal markets like Charlotte, Atlanta, Dallas, etc., and discussed that the industry faces nimbyism, but Digital Realty contributes to communities, stabilizes grids, and is working on behind-the-meter solutions while not giving up on the grid.

Q: Michael Elias from TD Cowen asked about enterprise AI demand and five to 15 megawatt capacity blocks.

A: Andrew P. Power and Colin McLean discussed that Digital Realty's sweet spot includes enterprises of all sizes, with strong performance in zero to one megawatt, emerging conversations around five megawatt blocks for inference, and ability to support mixed densities and connectivity scale.

Q: Michael Funk from Bank of America asked about releasing spreads and contract duration.

A: Andrew P. Power and Matthew R. Mercier discussed pushing escalators in renewals, living in an inflationary environment, with zero to one megawatt typically rolling with ad inflation or CPI, and larger contracts having embedded renewal options, focusing on getting the right price for value delivered.

Q: Vikram Malhotra from Mizuho asked about zero to one megawatt pipeline and available capacity.

A: Andrew P. Power mentioned record pipeline in zero to one megawatt, back-to-back billion plus years of new signings, and major markets like Northern Virginia, Charlotte, Atlanta with strong demand, globalizing demand into Europe, South America, and Asia.