EQUINIX INC(EQIX)Q2 2026 法說會逐字稿

Good afternoon, and welcome to the Equinix Second Quarter Earnings Conference Call. All participant lines will be listen-only until the Q&A session. Today's conference is being recorded. If you object, please disconnect at this time. I will now turn the call over to Ryan C. Burke, Vice President of Investor Relations. You may begin.

Good afternoon, and welcome to our second quarter conference call. Before we get started, I want to remind you that some of the statements that we make today are forward-looking in nature and involve certain risks and uncertainties. Actual results may vary significantly from those statements and may be affected by the risks we identify in today's press release and in our filings with the SEC. 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 our policy to not comment on our financial guidance during the quarter unless it is done through an explicit public disclosure. On today's conference call, we will provide non-GAAP measures. We provide a reconciliation of those measures to the most directly comparable GAAP measures in today's press release on the Equinix Investor Relations page at www.equinix.com. We have made available on our website a presentation that we will refer to, along with certain supplemental financial information and other data. With us today are Adaire Rita Fox-Martin, Chief Executive Officer and President; Olivier Leonetti, Chief Financial Officer; and Phillip Konieczny, Senior Vice President of Finance. At this time, I will turn the call over to Adaire.

Thank you, Ryan. Good afternoon to you all. The AI-driven infrastructure cycle continues to accelerate, and it is playing directly to our strengths. Demand for neutral, interconnected sovereign infrastructure is compounding across our business, and our global scale, differentiated portfolio and unmatched ecosystems are converting that demand into durable, profitable growth. You see this clearly in our Q2 results. Monthly recurring revenue growth accelerated to 11% year over year on a normalized and constant currency basis. This marks our third straight quarter of double-digit MRR growth with strong profit performance. Annualized gross bookings grew 23% — our second-highest volume on record. Total sales activity, inclusive of annualized gross bookings and pre-sales, grew over 30% and we continue to see a record backlog. We added 9.7 thousand net interconnections — our most ever. And AFFO per share grew 18% on a normalized and constant currency basis. This is a direct result of disciplined execution by our teams around the world. Given the strength of our performance as well as our bookings and pre-sales momentum, we are raising our full year guidance and long-term outlook. For 2026, we now expect revenue growth of 11% to 12% and AFFO per share growth of 10% to 12%. This is the largest single guidance raise in the history of our company, reflecting broad-based durable demand and strong execution across our business. We continue to accelerate our capacity expansion to meet this growing demand. In fact, we will double the number of cabinets we deliver in the second half of the year. As a result, we now expect 2026 CapEx to range between $5 billion and $6 billion. Looking further out, we expect to deliver top- and bottom-line growth well ahead of the outlook we provided last year. Through 2029, we expect total revenue growth in the 10% to 13% range annually, with AFFO per share growing 9% to 12% during the same period. To capture the robust demand in front of us, we plan to invest $5 billion to $7 billion in CapEx annually through 2029. These are high-conviction investments that we believe will deliver attractive returns while enabling the outcomes our customers need. And we fully expect the new capital we are deploying to deliver the mid-20 percent yield you have grown accustomed to. Olivier will provide a more detailed view of our outlook shortly. Our revised outlook reflects more than a strong quarter. It shows what a focused team executing the right strategy can deliver, and we are doing it in a market that is materially stronger than it was a year ago. As the market has evolved, the nature of the demand has given us greater conviction in our plan. A significant proportion of this demand comes from the world's largest enterprises modernizing their on-prem infrastructure that was never built for today's broad-based distributed workloads. The remainder comes from net-new AI-native workloads and service providers powering them. In both cases, the majority are already Equinix customers, and they increasingly need solutions we are uniquely positioned to deliver because of our consistent focus on this target market. All around the world, customers are confronting the same reality: their networking, cloud, and AI workloads are growing more distributed, complex, and demanding, and they need infrastructure built for a new era. Their workloads do not live in one place. They run across clouds, models, and geographies simultaneously in real time. That is something compute alone cannot solve. It requires connectivity at the intersection of everything. That point of intersection is Equinix. We have been at the center of every major shift in enterprise technology over the past 30 years. We were the neutral ground where the Internet scaled. We were the neutral platform that made multi-cloud real. And now as inference and agentic AI unleash extraordinary capabilities alongside new layers of complexity, we are the neutral exchange where customers can run, connect, and orchestrate it all. This kind of connectivity has never been more important, and no one has built what we have built. Our ecosystem is approximately twice the size of the next largest provider. Now as we curate the emerging AI ecosystem, our competitive advantage is growing. Eight of the top ten model providers as well as eight of the top ten neo-clouds are already running their key networking workloads on Equinix today. That kind of ecosystem density creates a flywheel of growth and value creation. Our infrastructure attracts interconnection-rich workloads. Interconnection expands the ecosystem. A more expansive ecosystem attracts more of everything, and our momentum continues to build. Let me share some recent customer examples that bring our momentum to life. Leading AI cloud infrastructure provider OrionVM selected Equinix to power its fully managed private agentic AI bundle, helping enterprises deploy and scale sovereign, agentic AI with a clear path to measurable ROI. Built on our secure neutral infrastructure, the bundle supports private AI deployments, heterogeneous compute, and autonomous AI capabilities. And through OrionVM's collaboration with Tenstorrent, customers gain greater choice and flexibility at the AI accelerator layer. FCX AI, Australia's sovereign AI infrastructure provider, partnered with Equinix to build the country's first sovereign AI inferencing node leveraging our Sydney operations. Equinix enables a faster, more governed path to integrating AI into core operations with a scalable foundation for expansion across Asia Pacific. Raymond James, one of the leading financial firms, selected Equinix to augment their on-prem model to our multi-cloud infrastructure. Our ability to enable low-latency connectivity to their customers, clouds, and SaaS providers, as well as the strength of our overall financial services industry ecosystem, were key factors in their decision to grow their business using Equinix. We are also working with Verizon to deliver enhanced enterprise connectivity by combining their adaptive network fabric with Equinix's neutral interconnection hubs. This integration via APIs allows for near real-time provisioning. Our unmatched metro density, global scale, and advanced automation capabilities help customers like Verizon lower execution risk and accelerate service delivery. These examples are enabled by our progress against our strategic pillars. Starting with Serve Better, we delivered annualized gross bookings of $424 million, up 23% year over year — a notable acceleration from Q1. In addition, we delivered approximately $110 million of pre-selling activity. Collectively, that is over 30% growth in total sales activity in the quarter. We have a robust pipeline entering the back half of the year and we have already closed over 45% of our bookings target for Q3. Our pre-selling motion continues to show very encouraging trends: we have now sold approximately 30% of our remaining 26 retail capacity expansion. Secure Cabinet Express, our standardized, business-ready colocation offering, is continuing to gain traction with cabinet orders up more than 30% year over year. It is a great example of how we are simplifying the customer buying experience to accelerate growth. On Solve Smarter, we are turning the demands of enterprise AI into products customers can deploy today. Most enterprises know what they want to build; the infrastructure to support it at scale is the challenge. Our expanded collaboration with Cisco and NVIDIA tackles this head-on by bringing standardized AI factory blueprints and automation across our global IBX network. And through our new partnership with Presidio, customers can test and validate before they scale. That is how we help enterprises move faster with greater certainty. Data sovereignty is a challenge for enterprises and an opportunity for Equinix. Most networks were built for conformance, not compliance. Our new Fabric Geo Zones offering was built for both: traffic either flows along compliant paths or it is blocked. Sovereignty is no longer a configuration; it is a property of the network itself. Fabric GeoZones is in preview with approximately 80 enterprises around the world. These are two examples of our customer-focused product roadmap, and we are just getting started. This week, we welcomed Chris Audi to Equinix as our Chief Product Officer. He brings extensive experience to the role, most recently as HashiCorp's Chief Product and Technology Officer for Infrastructure and AI. His strong background spanning product, software, and infrastructure will help us accelerate and expand our solution portfolio. We also named Bruce Owen, a 16-year Equinix veteran with deep experience across our business, as EVP Global Markets, overseeing our three regions. Chris and Bruce strengthen our leadership team at exactly the right moment. Turning to Build Bolder, our teams continue to execute at a high level. Our acceleration of more than seven thousand cabinets from 2027 into Q4 2026 reflects our confidence in our ability to deliver, as well as our commitment to bring capacity online faster to meet growing demand. This quarter, we announced significant new projects in Chicago, Istanbul, and Johor, with more expected throughout the remainder of the year. We now have 52 major projects underway across 33 markets. I also want to take a moment to emphasize something that matters deeply to us as we expand: in the communities where we build and operate, we are not a visitor — we are a neighbor. That distinction has defined our approach for nearly 30 years as we have built the essential infrastructure that underpins the everyday experiences and connections people depend upon. Across all of our markets, we engage early and transparently. We listen and adapt to local needs, and we invest for the long term because we are there to stay. That is how we build trust; it is what makes communities stronger over time; and it is why we have been able to consistently execute our projects on time and at scale. This quarter, we published our U.S. Community Principles. They reflect the standards that have long guided our approach and that we hold ourselves to. This includes funding energy and grid infrastructure costs directly, investing in renewable energy and water use efficiency, and creating meaningful opportunities for the people around us — from construction and skilled trades jobs to pathways for veterans and programs that build the next generation of technical talent. Based on our long-time leadership in these areas, I was in Washington, D.C. last week to support the Ratepayer Protection Pledge. Our commitment to being a good neighbor extends to every community we are part of around the world. Let me close by saying Q2 was an exceptionally strong quarter and reflects a business that is hitting its stride. We have been deliberate about our strategy, focused in our execution, and disciplined in where we invest. Now as the market evolves and expands, our efforts are paying off. Our decision to raise our guidance and put more capital to work reflects our confidence going forward. I will now turn it over to Olivier to take you through the financials in detail.

Thank you, Adaire. Our unique positioning and strong execution are evident in our performance and raised outlook through 2029. We are driving momentum across our business with demand strength in every vertical, product, and channel. Looking at Q2 results on Slide 7 of our earnings presentation, with growth rates discussed on a normalized and constant currency basis: recurring revenues increased 11% year over year, reflecting the underlying strength of our business and record bookings converted into revenue. Total revenues increased 16% year over year. As expected, we closed 134 megawatts of Xcel leases, including Hampton, which contributed approximately $120 million in nonrecurring fees. Our adjusted EBITDA margin was 53%, up 300 basis points year over year. This is a result of continued cost discipline, scaling our operating leverage, and our scale leasing fees. Excluding scale leasing fees, our adjusted EBITDA margin was up approximately 150 basis points year over year. AFFO per share increased 18% year over year. Our nonfinancial metrics also continue to demonstrate momentum and our strategy in action. We added a record 9.7 thousand net interconnections. We added 4.2 thousand net cabinet billings. And our backlog — sold but not yet installed — is at a record level. Churn was 1.8%, primarily due to our renewal process execution and some delayed churn. We expect to be near the lower end of our typical 2% to 2.5% range for the back half of the year. On Slide 10, you see that our capital investments deliver very strong returns. Our 194 stabilized assets are collectively 82% utilized and generated a 27% cash-on-cash yield on growth PP&E. We continue to achieve these upsized returns on assets we have delivered in recent years, reflecting our focus on offering differentiated infrastructure and services to our customers. On Slide 11, total capital expenditures for the quarter were about $1.6 billion; approximately 90% of that was invested in capacity expansion. Since the last earnings call, we have opened new projects in Madrid, Milan, and Silicon Valley. Turning to our capital structure on Slide 12, we have approximately $7.7 billion of available liquidity, including our recently upsized revolving credit facility, and our net leverage was 3.6 times annualized adjusted EBITDA. We continue to execute on our access to lower-cost capital around the world to fund our growth. Now please refer to Slides 14 to 18 for an updated view of our 2026 guidance, with all growth rates on a normalized and constant currency basis. Based on the robust environment and the team's execution, we are raising 2026 guidance for the second consecutive quarter. The raise reflects our recent outperformance and a stronger outlook for the rest of the year. For the third quarter, we anticipate continuing strength including MRR growth of 9% to 11% year over year, total revenue growth of 10% to 12% year over year, and an adjusted EBITDA margin of 51%. For the full year, with dollar amounts discussed prior to FX adjustments, we are raising total revenue guidance by $100 million, improving our expected growth range to 11% to 12%. We expect MRR growth to be around 10% at the end of our prior range. We are raising adjusted EBITDA guidance by $62 million resulting in an adjusted EBITDA margin of approximately 51%, a 200 basis point improvement over last year. We are raising AFFO guidance by approximately $50 million, driving an increase in our expected AFFO per share growth range to 10% to 12%. Excluding real estate acquisition and xScale, we expect total capital expenditures to be $5 to $6 billion as we accelerate capacity expansion into the year. As Adaire mentioned, a significant portion of our planned capacity additions for the remainder of 2026 are already committed through bookings and pre-sales, providing increased visibility into future growth and returns. Now turning to our long-term outlook update: we are clearly in a stronger environment and the team is executing. We have been closely analyzing the market opportunity to calibrate where we stand and where we are headed. Through this, we have gained even stronger conviction in our strategy, positioning, and trajectory. With AI as an accelerant, we expect demand to remain robust as customers modernize their technology architectures and quickly orchestrate their strategies on our platform. Scaling our business will continue to be a focus, driving revenues, controlling expenses, and enhancing our margins. Our competitive advantages drive returns on development that are unmatched. Recognizing the strength, we have developed a demand-driven capacity expansion plan that accelerates delivery timelines, enables deployment flexibility in response to demand signals, minimizes earnings drag, and maximizes our long-term growth profile. Demand is clearly exceeding the assumptions in our prior long-term outlook. Bookings, pre-sales, backlog, and pricing are strong, and we are uniquely positioned to meet the durable demand by deploying capital over the next few years. We expect $5 billion to $7 billion of capital expenditures annually from 2027 to 2029 with the vast majority focused on capacity expansion delivered into a target market where our value proposition is increasingly differentiated. More than 80% of this expansion will be in our top 25 major global metros. The result will be a higher-growth portfolio built over 30 years that is uniquely fit to serve the new technology era. And as always, our balance sheet and diversified capital program are critical differentiators. In combination with significant retained cash flow, we will continue to access lower-cost sources of capital to fund our robust growth opportunity. Referring to Slide 19, we expect the following for 2027 through 2029: total revenue growth ranging from 10% to 13% per year, beginning the period at the low end of this range and accelerating as the benefit of our capacity expansion plan builds; adjusted EBITDA margin to reach 53% or higher by 2029; AFFO per share growth in the 9% to 12% range per year; capital expenditures in the $5 billion to $7 billion range per year excluding real estate acquisitions and xScale; and dividend growth to approximate AFFO per share growth. Utilizing our balance sheet, we will achieve this with only a moderate leverage increase allowing us to maintain our current and critically important investment-grade credit ratings. In conclusion, demand is stronger and more durable; the team is executing; our confidence in future growth has increased; and we are accelerating capacity expansion to capture what is in front of us. I now turn the call back over to Adaire.

Thanks, Olivier. The first half of 2026 has been a strong one, and it has set the stage for something bigger. The demand signals are clear, our strategy is working, and the investments we are making today are designed to drive sustainable long-term growth well above our prior expectations. We will maintain our relentless focus on disciplined execution that solves the challenges our customers face and creates value for our shareholders. Our team stands ready for the opportunities ahead. With that, let's open the line for questions.

Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star then one on your telephone keypad. Our first question comes from Eric Luebchow with Wells Fargo. Your line is open.

Great. Thanks for taking the question. Adaire, I just wanted to get your view on the long-term guidance raise. Obviously, a huge change from last year. Maybe you could talk through at a high level what you are seeing in the market that has given you the degree of confidence to raise CapEx this much? As we think about the forward growth mechanism for revenue of 10% to 13%, previously you had talked more about it being based on MRR per cabinet growth than installed or billable cabinets. Has that changed at all based on the CapEx increase and the pipeline that you talked about? Thank you.

Thanks so much for the question, Eric. Let me start with the view from this year to last. We have seen acceleration in the AI infrastructure cycle, and that plays directly to the strength of Equinix. We are uniquely positioned to enable our customers and partners to execute their AI strategies, particularly as they shift to inferencing. We are seeing customers become much more sophisticated in how they pursue their AI requirements. Broadly, we have deep and broad customer demand across our portfolio. AI is an accelerant to the ongoing digitization activities of our customers. In Q2, the vast majority of our largest deals were driven by AI workloads, similar to what we have seen in previous quarters. Execution by our team has been better across the board compared to this time last year — sales activity, operations, margin and cash flows, capacity expansion, and how we are financing our growth. Externally, market dynamics have moved inference ahead of where we initially expected, and that is materially stronger than what we saw a year ago. We have been very thoughtful; we have re-evaluated everything including the shape of our customer demand, optimization of expenses, CapEx, and our finance plans. Our revised outlook reflects more than a strong quarter. It reflects a market opportunity that has materially improved over the past 12 months, and this has been a huge collective effort. I want to thank our team for all the work they have done this year.

One additional point that is important, Eric: most of the deployment of the capital — over 80% of it — will be in our top 25 metros. These are markets we understand well, where we have a competitive advantage, where demand is higher than supply, and where we already have a strong ecosystem with utility providers, global contractors, and community relationships. We feel very comfortable about this updated long-term guidance.

The next question comes from Ari Klein with BMO Capital Markets. Your line is open.

Adaire, with AI strategies being implemented, are you seeing any changes in underlying deal metrics or compositions? Are different markets more in demand? What about deal sizes and interconnect attach rates, especially with the strong net adds this quarter? Thank you.

Thank you, Ari. We are seeing changes in deal structures. The density of our deals is moving upwards as customers seek to secure the capacity they need for their energy and compute future. That is one clear change in the deal mix. On interconnection, as highlighted in our prepared remarks, we had a very strong quarter adding over 9.7 thousand net interconnections and interconnection revenue growing around 9%. As customers come onto our platform initially, we typically see interconnection revenue increase as their deployments progress. Even with increasing footprint sizes from customers, our pricing has remained very firm, and we are managing to secure the yields you have come to expect from Equinix.

To add, Ari, the complexity of the ecosystem we serve is increasing. Cloud providers, neo-clouds, and enterprise AI models all contribute to that complexity, and this trend plays to Equinix's strength.

The next question comes from Matt Niknam with Truist. Your line is open.

Hey, thanks so much for taking the question. Congrats on the quarter. On interconnect, can you speak to where you are seeing some of this increased demand coming from? And if you have a product that is in such high demand, how do you think about the opportunity for incremental pricing actions on interconnect over the longer term? Thanks.

Thanks, Matt. The demand is reflected in our interconnection franchise growth. This is one of Equinix's unique value propositions. We have added capabilities to our interconnection portfolio through our Fabric product suite, most recently Fabric Geo Zones which supports sovereignty requirements. Last quarter we noted a smaller preview group; this quarter we have about 80 enterprises in preview. Fabric Intelligence adds capabilities for observability and management. We see significant growth potential in Fabric offerings. For example, bookings for Cloud Router are up 170% year over year, driven partly by non-colocation customers. Elevating the value proposition of our Fabric offerings is a priority for our product organization and will drive incremental growth.

The next question comes from Frank Louthan with Raymond James. Your line is open.

Great. Thank you. When looking at the new guidance and going forward, what is the right level to think of the normal for nonrecurring revenue as a percentage of total revenue? How should we think about that with the new guidance level you set? Thanks.

You should assume the traditional 5% of total revenue as a good, moderate assumption.

The next question comes from Michael Rollins with Citi. Your line is open.

Thanks and good afternoon. Within the new guidance for revenue, can you share how each of the three geographic regions are progressing and how they should grow relative to the total portfolio? As you invest more in the business, is your expectation that revenue growth within this range should be similar each year, or do you see it accelerating? How does the higher investment level come through the P&L over the next three-plus years? Thanks.

Thanks, Michael. One of our benefits is the diversification of our customer base and portfolio across regions, industries, and product groups — we have no material concentration risk. On Page 8 of the deck, we had a very strong performance in the Americas related to revenue. Even normalizing for the Hampton transaction, we still had low-double-digit growth in the Americas. APAC had an excellent quarter and is beginning to pick up, with significant activity bringing new customers into our portfolio. EMEA continues to perform well, though some main metros like Frankfurt and Amsterdam are highly constrained. This regional balance is an important aspect of our portfolio. We expect The Americas to continue strong given much of AI activity is based here initially, but APAC is rapidly following. EMEA growth may be more underpinned by sovereignty-focused offerings. Overall, this is a balanced and strong regional performance.

If you look at the range of growth per year, expect growth to be higher at the end of the planning period by 2029. That will be a byproduct of our CapEx deployment, and AFFO should follow revenue growth. There could be some volatility due to lumpiness of nonrecurring revenue in particular years, but the overall trend is clear. Also, at stabilization — about three to four years post-ready-for-service — we expect to deliver the traditional mid-20% cash-on-cash returns we have discussed previously.

The next question comes from Jonathan Atkin with RBC. Your line is open. Jonathan, you have hit your mute button.

Thanks. I am interested in the contribution of things like renewal spreads to the upside in the guidance on a multi-year basis. And then, as we think about the CapEx plan going forward, what are the financing tools available to you and how do you think about leverage? Thank you.

Thanks for the question, Jonathan. On pricing, we see healthy and firm pricing reflected in our revenue growth. On the capacity and execution side, our teams are focused on delivering critical capacity and accelerating that delivery against growing demand. Our per-kilowatt pricing is attractive because of the superior value we deliver. Net pricing actions were strong in Q2 and continue to trend favorably. We recognize we are in a demand-and-supply continuum that is in our favor, and we see meaningful mark-to-market opportunity over the long-range guide period, especially in highly constrained markets such as Ashburn and other key metros. The team is consciously evaluating how we bring additional capacity in our top 25 metros to capture that opportunity.

On the debt and financing question, our balance sheet is a strategic differentiator and maintaining an investment-grade rating is core to our capital strategy. We expect to fund growth through two levers: first, retained cash flow — we have a payout ratio in the 50% range, which results in sizable retained cash flow — and second, debt, where we will access the most favorable sources of capital. As a result of this plan, we expect leverage to increase by about one turn between now and the end of the planning period, and the blended cost of capital to increase by about 150 basis points.

The next question comes from Nicholas Del Deo with MoffettNathanson. Your line is open.

Thanks for taking my question. Can you talk about the steps you are taking from an operational and risk management perspective to ensure that you can effectively deploy as much CapEx as you are budgeting over the next few years, and how you would adjust if realized demand does not match your forecast for some reason? When you look out to 2029, do you think the capacity you have online will largely match demand, or do you expect to still be short supply relative to what customers desire? Thank you.

Great question, Nicholas. Our approach is thoughtful and focused on deploying CapEx for the highest value in metros where we will maximize returns — markets where we already operate and understand customer dynamics. We have demonstrated the ability to accelerate when appropriate: in 2025 we accelerated 20% of our retail footprint into 2026, and for Q4 2026 we are nearly tripling the number of cabinets available. The team can accelerate further if demand signals justify it. We use a combination of external measures and an internal proprietary demand model rooted in our customer relationships and pipeline to plan alongside customers. With this long-term guide, we believe we have a good balance of meeting market demand while managing CapEx prudently.

The next question comes from Michael Funk with Bank of America. Your line is open.

Yes, great. Thanks for the question. I have questions around the development spending you laid out and the broader context of larger amounts we have seen across the space. What gives you confidence to increase development spending in the current environment that the durability of supply and demand is going to stick?

Thank you, Michael. Over the past four quarters, and particularly since this time last year, we have seen strong performance: total sales activity, firm pricing, and declining churn. Equinix is unique in focusing on the enterprise sector, which we expect to be a major beneficiary of AI technology as enterprises continue their digitization. Many market requirements play to our strengths: dense interconnection ecosystems, global footprint, and metro presence. We have a proprietary demand model and significant visibility into server and silicon backlogs among OEMs and partners. External factors also support our view: enterprise IT budgets are healthy, server demand is accelerating, and data center silicon is growing in both volume and price. These external signals, combined with our pipeline and proven execution, give us confidence in the durability of demand.

We also used a bottom-up approach to our planning exercise. Over 80% of our CapEx will be deployed in about 25 metros where we understand the ecosystem and have strong relationships with utilities, contractors, and communities. The bottom-up and top-down perspectives give us additional confidence in the trajectory.

The next question comes from Michael Elias with TD Cowen. Your line is open.

Great. Thanks for taking the question. Building on the bottom-up approach, I'd like to hear more about the supply side. Many of the top 25 markets are power-constrained. How should we think about the percentage of incremental capacity supported by explicit energy supply agreements with utilities and your visibility into that power? Also, what visibility do you have on the mechanical and electrical equipment and the skilled labor needed to deliver incremental capacity?

Thanks, Michael. Today we have three gigawatts of land under control, and we are building about 700 megawatts of that land right now. We are not speculative land developers; our three gigawatts were either certain in terms of contracted power or we have a very high degree of confidence that power will be contracted. When we announce projects, we usually have gone through internal gating that covers power energization and permitting, which is why our projects proceed on time and at scale. Regarding supply chain and M&E, we have a strong procurement team and long-standing, 360-degree relationships with main suppliers. Our balance sheet allows us, where appropriate, to pre-purchase elements of equipment. Our designs are fungible across the portfolio, which gives flexibility to move equipment where needed. In North America, we have deep and longstanding relationships with general contractors, which helps secure skilled labor and execution capability. Overall, we are comfortable with our ability to manage supply-side risks through relationships, process, operations, and balance sheet where necessary.

A typical data center we build is about 60 megawatts, which is much more manageable operationally than the one-gigawatt developments you may see from other players.

The next question comes from Michael Ng with Goldman Sachs. Your line is open.

Hi, good afternoon. Thanks for the question. Regarding the $5 billion to $7 billion annual CapEx plan, in terms of IT capacity, at $11 million per megawatt that would translate to about 1.6 gigawatts over three years given your three gigawatts of developable capacity. Is that a reasonable way to think about it from an IT capacity perspective? How are you thinking about refilling the land bank over the next three years — will the three gigawatts be preserved, or will it be worked down?

By the end of the planning period, we will have about two gigawatts still available, and this additional CapEx will use about 0.3 gigawatts of power.

The next question comes from Cameron McVeigh with Morgan Stanley. Your line is open.

Hi, thank you. Are you seeing evidence in your leasing pipeline that open-weight models are driving incremental private AI or enterprise inference deployments? And Olivier, now that you have had a few months in the CFO role, how are you framing the capital allocation opportunity and priorities? Any updates on how we should think about puts and takes to margin expansion over the next few years? Thanks.

On capital allocation, the company has been and will remain prudent. We expect to invest mainly internally in the business because we see an opportunity to generate attractive returns. In terms of margin, we are targeting a 53% plus adjusted EBITDA margin by 2029, driven by three factors: pricing, cost of revenue improvements, and SG&A scaling. We are a functionalized organization, which supports standardization and automation, including AI, across processes. That will drive margin expansion through improvements in go-to-market, operations, and support functions.

To address use-case adoption in the enterprise base, we see four distinct AI use cases today. First is the stack use case, where enterprises run open models on private AI infrastructure to cut token cost; this speaks well to Equinix's AI-ready data centers, connectivity to cloud, and partnerships with OEMs. Second is sovereign use cases, where companies deploy sovereign AI stacks for data residency and compliance reasons; our presence in 36 countries and Fabric capabilities allow customers to geofence traffic into a particular jurisdiction. Third is batch use cases, where customers deploy centers of excellence or AI factories for model training and batch inferencing, and many of these deployments are driven by our ability to provide liquid cooling. Fourth is latency-sensitive inference, where the inference stack needs to be present in a metro to meet latency and to reduce data backhaul costs. These four — stack, sovereign, batch, and latency-sensitive — are the core use cases we see driving demand today.

Thank you. That is all the time we have for questions. I will turn the call back to Ryan for closing remarks.

I want to thank you all for joining today. We look forward to talking to many of you in the coming days and weeks. Take care.

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