EQUINIX INC Q4 FY2024 earnings call

• 2024 was a strong year with record gross bookings in both Q4 and the full year, demonstrating the resilience and strength of the business. - The channel program contributed nearly 30% of bookings and more than 50% of company new logos in 2024. - The operations team achieved greater than five-nines of uptime for customers and reduced PUE by over 6%, lowering operating costs by $18 million. - Opened new data centers in Jakarta and announced the Singapore 6 build. - Secured two new native cloud on-ramps in New York and Mexico City. - Had more than 482,000 total interconnections deployed, with an incremental 6,000 underlying interconnections in Q4.

For the full year 2024, Equinix reported revenues of $8.7 billion, up 8% year-over-year. Adjusted EBITDA was $4.1 billion, a 160 basis point improvement in margins year-over-year. AFFO per share grew 10% year-over-year. Regionally, APAC was the fastest-growing region at 13%, followed by the Americas at 8% and EMEA at 2% (dampened by xScale leasing in Q4 2023). Interconnection revenue stepped up 9% year-over-year on a normalized and constant currency basis, representing 19% of recurring revenues. In the xScale business, approximately 150 megawatts of capacity was leased in 2024, and the investment capital of the program was nearly tripled.

• For 2025, revenue is expected to grow 7%-8% on a normalized and constant currency basis. - Adjusted EBITDA margins are anticipated to be approximately 49%, a 190 basis point improvement over 2024. - AFFO is expected to grow between 9% and 12% compared to the previous year. - CapEx is expected to range between $3.2 billion and $3.5 billion. - The cash dividend will be increased by 10% on a per share basis, with the cash dividend expected to be approximately $1.8 billion, a 13% year-over-year increase.

• Capacity constraints in some key markets that could crimp sales. - Impact of foreign exchange fluctuations on financial results. - Execution risks related to new projects and business initiatives, such as the end-of-sale of Equinix Metal and certain asset impairments.

Q: Simon Flannery with Morgan Stanley asked about AI inference and the xScale JV update.

A: Adaire Fox-Martin discussed the relevance of Equinix to AI inference, noting 50% of top 25 deals in Q4 were related to high-performance compute and AI workloads, and Keith Taylor provided an update on xScale projects, mentioning 87% of under-construction projects are leased or pre-leased and progress on the Hampton site.

Q: Eric Luebchow with Wells Fargo inquired about the forward pipeline and churn expectations.

A: Adaire Fox-Martin stated the forward pipeline is strong with record gross bookings, especially in non-Tier 1 metros, and discussed churn expectations, guiding to a range of 2%-2.5% for 2025 and focusing on increasing interconnection rates to manage churn.

Q: Jonathan Atkin with RBC Capital Markets asked about power management and expenses.

A: Adaire Fox-Martin and Keith Taylor discussed power management within stabilized assets, emphasizing careful SLA management and demand-shaping, and Keith Taylor addressed expenses, mentioning factors like repairs and maintenance spending and operational efficiency initiatives.

Q: Nick Del Deo with MoffettNathanson asked about capacity constraints.

A: Adaire Fox-Martin explained that capacity constraints vary by region, and the build bolder strategy is focused on delivering retail capacity efficiently, with projects like NY3, DC16, and LD4 accelerated, and 62 major projects underway.

Q: Michael Rollins with MoffettNathanson questioned revenue trends and cabinet growth.

A: Keith Taylor explained the revenue growth guide factors, including FX impact, reduced power costs, and metal impact, and emphasized the importance of inventory and recurring revenue growth driving the guidance.

Q: Jim Schneider with Goldman Sachs asked about revenue trends and xScale JV.

A: Adaire Fox-Martin and Keith Taylor discussed recurring revenue growth driving 2025 guidance, the importance of inventory for sales, and progress on xScale projects, including the Hampton site and other potential sites in the U.S.