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DR

DIGITAL REALTY TRUST, INC. (DLR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered double-digit top-line and bottom-line growth with revenue up 6% sequentially and 10% year-over-year to $1.49B, Adjusted EBITDA up 4% q/q and 13% y/y to $823M, and Core FFO per share a record $1.87 (+6% q/q, +13% y/y) .
  • Wall Street consensus was exceeded: revenue beat by ~2.5% and EPS (SPGI primary EPS) beat by ~8% in Q2 2025; management raised FY 2025 Core FFO guidance to $7.15–$7.25 (constant-currency $7.10–$7.20) and lifted revenue and Adjusted EBITDA ranges by $100M and $75M, respectively (catalyst) . Values retrieved from S&P Global.
  • Leasing momentum was broad-based: $135M bookings at DLR’s share (record $90M in 0–1 MW + interconnection), backlog at $826M, renewals up 7.3% cash and 9.9% GAAP; churn only 1% .
  • Hyperscale funding model advanced: inaugural U.S. Hyperscale Data Center Fund is oversubscribed with >$3B LP commitments; >$900M gross proceeds from asset contributions; liquidity >$7B, leverage 5.1x net debt/Adj EBITDA .

What Went Well and What Went Wrong

  • What Went Well

    • Record Core FFO/share of $1.87 on strong commencements and interconnection momentum; management raised full-year guidance (revenue, Adjusted EBITDA, Core FFO) .
    • Broad-based leasing with a record $90M in 0–1 MW + interconnection bookings and balanced regional contributions; backlog sustained at $826M .
    • Strategic capital progress: hyperscale fund oversubscribed (> $3B LP equity), >$900M gross proceeds, additional Eurobond issuance (€850M 3.875% due 2034) with refinancing of €650M notes post-quarter .
    • Quote: “Record bookings in our 0–1 megawatt plus interconnection product set underscore the strength of our full spectrum strategy…” — Andy Power, CEO .

  • What Went Wrong

    • G&A guidance increased by $15M, reflecting higher operating scale and cost ramp, tempering some margin expansion .
    • Cash releasing spreads guidance raised only modestly (cash 5–6%; GAAP 7–8%), and management noted renewal mix dynamics (large-package “other” deals aided H1) likely won’t repeat in H2 at same magnitude .
    • Refinancing headwind: repayment of 0.625% Eurobonds and new notes imply a ~325 bps headwind starting Q3 2025, impacting interest expense trajectory .
    • Analyst concerns on power availability and long lead times for large capacity blocks; deliveries skew late-2026/2027 (timing risk, though pipeline strong) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1,435.9 $1,407.6 $1,493.2
Diluted EPS ($USD)$0.51 $0.27 $2.94
Adjusted EBITDA ($USD Millions)$751.3 $791.2 $823.3
FFO per diluted share ($USD)$1.61 $1.67 $1.75
Core FFO per diluted share ($USD)$1.73 $1.77 $1.87

Year-over-year comparison:

  • Revenue Q2 2024 → Q2 2025: $1,356.7M → $1,493.2M (+10.0%) .
  • Diluted EPS Q2 2024 → Q2 2025: $0.20 → $2.94 (boosted by gains on sale; see non-GAAP reconciliation) .

Consensus vs actual (Q2 2025):

MetricConsensusActualSurprise
Revenue ($USD Millions)$1,444.8*$1,481.1*+2.5%*
Primary EPS ($USD)$0.363*$0.392*+8.0%*

Values retrieved from S&P Global.

Segment/leasing mix (DLR share, Q2 2025):

CategoryAnnualized GAAP Rent ($USD Millions)Kilowatts (000s)NRSF (000s)
0–1 MW$72.52 21.7 240
>1 MW$45.04 23.3 152
Interconnection$17.35 N/AN/A
Total$135.32 45.0 401

KPIs:

KPIQ4 2024Q1 2025Q2 2025
Bookings (DLR share, $USD Millions)$84.9 $242.3 $135.3
Backlog (DLR share, $USD Millions)$797 $919 $826
Renewal cash releasing spread (%)4.7% 5.6% 7.3%
Churn (%)2.0% 1.5% 1.0%
Commencements ($USD Millions)n/a$119 $220 (record)
W/A lag signing→commence (months)6 10 4
Liquidity ($USD Billions)>$6 >$5 >$7
Net Debt / Adj. EBITDA (x)4.8x 5.1x 5.1x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total revenueFY 2025$5.825–$5.925B (Apr 24) $5.925–$6.025B (Jul 24) Raised
Adjusted EBITDAFY 2025$3.125–$3.225B (Apr 24) $3.200–$3.300B (Jul 24) Raised
G&AFY 2025$505–$515M (Apr 24) $520–$530M (Jul 24) Raised
Cash renewal spreadsFY 20254–6% (Apr 24) 5–6% (Jul 24) Raised
GAAP renewal spreadsFY 20256–8% (Apr 24) 7–8% (Jul 24) Raised
Year-end occupancyFY 2025+100–200 bps (Apr 24) +100–200 bps (Jul 24) Maintained
Same-capital cash NOI growthFY 20253.5–4.5% (Apr 24) 3.5–4.5% (Jul 24) Maintained
Dispositions/JV capitalFY 2025$500–$1,000M (Apr 24) $700–$1,000M (Jul 24) Raised
Long-term debt issuanceFY 2025$900–$1,500M (Apr 24) ~ $2,000M (Jul 24) Raised
Net income/diluted shareFY 2025$2.15–$2.25 (Apr 24) $3.45–$3.55 (Jul 24) Raised
FFO/share (NAREIT)FY 2025$6.65–$6.75 (Apr 24) $6.70–$6.80 (Jul 24) Raised
Core FFO/shareFY 2025$7.05–$7.15 (Apr 24) $7.15–$7.25 (Jul 24) Raised
Constant-currency Core FFO/shareFY 2025$7.05–$7.15 (Apr 24) $7.10–$7.20 (Jul 24) Raised

Earnings Call Themes & Trends

TopicQ4 2024 (Previous Mentions)Q1 2025 (Previous Mentions)Q2 2025 (Current Period)Trend
AI/technology initiativesEmphasis on AI-ready HD Colo 2.0; Private AI Exchange; record bookings; AI leases ~38% of MW signed Largest lease on record; ~2/3 of signings AI-related; enterprise AI pipeline growing Continued AI-driven demand; inference expected to proliferate; Lucasfilm cited; Oracle partnership announced Strengthening
Interconnection momentumRecord interconnection bookings (~$15M) and new logos Strong interconnection; Azure on-ramps expansion Record interconnection bookings and pricing standardization; virtual services maturing Accelerating
Hyperscale fundingExpanded private capital JVs; liquidity >$6B; leverage <5x Launch of U.S. Hyperscale Fund (> $1.7B initial commitments) Fund oversubscribed (> $3B LP equity), asset contributions, >$900M proceeds Advancing
Supply chain/tariffs/powerTight power; strong vendor programs; modest build cost impact (<5%) from tariffs; focus on USMCA supply Power blocks demand skewed late-2026/2027 Executive order to streamline permitting; expand grid; expect US AI stack export; positive industry impact Policy tailwinds
Regional trendsEMEA exports at record; APAC strong; Americas pricing strength Hyperscale demand led by North America; EMEA/APAC lag for AI EMEA/APAC AI demand growing but lag U.S.; APAC (Tokyo/Singapore) expanding U.S.-led, gradual globalization
Regulatory/legalNareit ESG accolades; sustainability programs n/aPolicy support via permitting executive order cited Improving framework
Product performanceHD Colo 2.0, ServiceFabric expansion; high-density deployments Pricing milestone: $244/kW/mo on new data center leasing 0–1 MW + interconnection bookings a record; renewals robust Strong execution

Management Commentary

  • “Our inaugural U.S. Hyperscale Data Center Fund is oversubscribed, providing us the capital necessary to serve our customers’ growing requirements and to extend Digital Realty’s runway for growth.” — Andy Power, CEO .
  • “Core FFO surged to a record $1.87 per share… contributing to an increase in our revenue, adjusted EBITDA and Core FFO per share guidance for full year 2025.” — Jordan Sadler, IR .
  • “Leverage remains at 5.1 times… while liquidity remained robust at more than $7 billion, excluding the war chest of private capital.” — Matt Mercier, CFO .
  • “Global pricing standardization… and comprehensive interconnection suite (physical and virtual) are underpinning record growth.” — Chris Sharp, CTO .

Q&A Highlights

  • Interconnection: Record bookings; momentum continuing into H2; pricing aligned globally; virtual services expanding to AI use cases .
  • Large capacity blocks: Demand strong; deliveries focused late-2026/2027; Northern Virginia ~350 MW pipeline; conversations active with hyperscalers .
  • Renewal spreads: H1 outperformance aided by “other” (PBB shell) category; H2 likely within raised guidance ranges; zero-to-one MW weighted .
  • Permitting order: Management views U.S. executive order as positive tailwind (streamlining permitting, power grid modernization, workforce) .
  • Capex trajectory: Gross development CapEx can expand with private capital support; aim to accelerate deliveries while preserving per-share growth .
  • Utilities/commitments: Higher utility upfront commitments are rationalizing the industry; favors scaled counterparties like DLR .

Estimates Context

  • Q2 2025 beats vs S&P Global consensus: Revenue $1,481.1M vs $1,444.8M (+2.5%); Primary EPS $0.392 vs $0.363 (+8.0%). Full-year guidance raised on revenue, Adjusted EBITDA, and Core FFO, suggesting upward estimate revisions near term . Values retrieved from S&P Global.
  • Note: Company-reported diluted EPS ($2.94) reflects GAAP results including gains on asset sales; SPGI “Primary EPS” is a normalized metric and differs from GAAP diluted EPS .

Key Takeaways for Investors

  • Raised FY 2025 guides (revenue, Adjusted EBITDA, Core FFO) with record Q2 Core FFO/share and strong interconnection momentum supports upward estimate revisions; near-term positive sentiment .
  • Hyperscale fund oversubscription (> $3B LP equity) and >$900M proceeds de-risk capital needs and extend growth capacity without overtaxing the balance sheet; liquidity >$7B, leverage 5.1x .
  • Leasing strength is balanced: 0–1 MW + interconnection category is accelerating (record $90M in Q2), while large-block hyperscale demand aligns with late-2026/2027 deliveries; backlog sustained at $826M .
  • Renewal economics improving: cash +7.3% and GAAP +9.9% in Q2; management raised full-year releasing spread ranges; churn contained at 1% .
  • Watch headwinds: G&A up $15M; refinancing adds ~325 bps headwind starting Q3; FX and “other” category tailwinds may normalize in H2 .
  • Policy tailwinds (U.S. permitting executive order) and ecosystem partnerships (Oracle Solution Centers) reinforce interconnection growth and enterprise AI adoption catalysts .
  • Trading implication: Guidance raise and record execution are catalysts; durability of 0–1 MW + interconnection growth and hyperscale fund economics support medium-term Core FFO compounding; monitor power availability timelines and H2 renewal mix .

Additional Q2 2025 Materials

  • Earnings press release: Digital Realty Reports Second Quarter 2025 Results –.
  • Earnings call transcript (Q2 2025): broad participation and detailed Q&A –.
  • Partnership press release: Digital Realty teams with Oracle Solution Centers to accelerate AI and cloud adoption –.
  • Capital markets: issuance of €850M 3.875% notes due 2034 and repayment of €650M notes post-quarter .