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.