xScale Business Outlook
Q: How is xScale performing, and will you expand it?
A: xScale continues to perform extremely well, with huge pre-leasing activity and strong demand. Equinix is confident in effectively pre-selling capacity at returns at or above last year's levels despite rising costs. " They are planning to continue expanding the xScale platform globally, including in the U.S. and the Americas " , as demand has significantly exceeded initial expectations. "

Accounting Investigation Outcome
Q: What were the findings of the internal accounting review?
A: An independent audit committee, assisted by WilmerHale and AlixPartners, conducted a thorough review of the accounting allegations. " They confirmed confidence in the accuracy of Equinix's financial reporting on both GAAP and non-GAAP bases. " While the investigation remains open due to SEC and DOJ subpoenas, management feels confident about the outcome and the integrity of their team. "

Refinancing Debt Strategy
Q: How will you refinance upcoming debt maturities?
A: Equinix plans to refinance the $1 billion due in 2024 and $1.2 billion due in 2025 by focusing on achieving a competitive spread of 105 to 115 basis points over base rates. " They may issue debt in euros or dollars and could swap currencies as needed. " With an unused $4 billion line of credit, they are well-positioned even in volatile markets. "

Unlevered Return Expectations
Q: Are low teens unlevered returns reasonable for xScale?
A: Yes, achieving low teens unlevered returns on xScale developments is considered reasonable and appropriate. " Pricing remains very firm due to strong demand and constrained supply, leading to attractive returns. "

Cabinet Growth and Utilization
Q: Why were cabinet adds soft, and will they improve?
A: Cabinet growth was impacted by higher power densities, leading to fewer cabinets but higher revenue per cabinet. " Equinix expects cabinet billing to increase, driving utilization up over time. " They are managing capacity constraints in key markets like New York and Singapore " , and anticipate growth in the second half supported by a strong pipeline. "

DC2 Data Center Redevelopment
Q: What are the plans for the DC2 redevelopment?
A: Equinix is investing $76 million to redevelop DC2, effectively performing a "heart transplant" to extend its life and unlock 15% to 20% more revenue capacity. " The project aims for an IRR better than stabilized assets, targeting returns in the 30% range. " The redevelopment will take two to three years and is part of a plan to upgrade several facilities over the next few years. "

AI's Impact on Business
Q: How is AI influencing your business?
A: While still in early stages, there's significant interest in AI, leading to a rich pipeline of opportunities. " Equinix is seeing increased demand for both large-scale training workloads and distributed inference workloads, particularly benefiting from their distributed footprint. " An uptick in larger footprint deals this quarter is partly associated with AI-related workloads. "

Revenue Outlook and Guidance
Q: Has your revenue outlook for the second half changed?
A: Equinix maintains its guidance of 7% to 8% constant-currency revenue growth excluding PPI. " Despite a strong Q1 and a solid pipeline, they note some level of customer caution and churn. " They anticipate acceleration in bookings in the back half of the year but are balancing opportunities with market uncertainties. "

Decision on New Metrics
Q: Will you introduce new metrics for power density?
A: Equinix has decided to stick with existing metrics—billable cabinet count and MRR per cabinet—rather than introducing new ones. " They aim to provide better visibility on how the product of these metrics drives growth, despite the complexity added by increasing power densities. "