Good afternoon, everybody. My name is Brandon Nispel. I cover data centers and tower REITs for KeyBank. Thank you for coming to the KeyBank Technology Leadership Forum. This is a 25-minute fireside chat. We have Equinix with us, Tiffany Osias, Managing Director of xScale, and Chip Newcom, Head of Investor Relations. Thank you both for being here. Yeah, thanks for having us. Thanks for having us. I'll do our quick disclaimer for everyone here and online. Some of the things we're going to say today are forward-looking in nature. Please see our SEC disclosures for any risks and uncertainties. That out of the way, now we can actually talk to the fun stuff. Great. Tiffany, I want to start with you. Managing Director of xScale, sort of a new business for Equinix. Maybe level set us. What's your background and what is xScale? Yeah, so my background, I've been at Equinix now for nine years, and I actually came from our retail colocation business first. Those that know Equinix know that we have a couple decade and a half history in global colocation services where we have data centers all around the world. About eight years ago or so, our largest, most strategic customers asked us to enter more of a wholesale space because they wanted to be able for us to provide them much larger footprints. That was the inception of xScale. On the retail side, I think lots of customers, you know, we have 10,000 customers, so lots of customers all occupying or colocating in the same building. I think on the xScale side, much fewer in number of customers and much bigger footprints. What was attractive about sort of expanding into maybe more of the hyperscale customers that you couldn't address previously? Yeah, I mean, the great part is that we were addressing those hyperscale customers mostly from their network nodes. Equinix has more than 35% of the global cloud on-ramps. The hyperscalers were looking to Equinix to put in all those interconnectivity devices, but hadn't been able to yet put their core nodes with us. That's why we entered xScale about eight years ago in EMEA and in Asia in particular. I'd add to part of why the genesis behind xScale was also about capital efficiency. The fact that within our retail business, you know, we're targeting yields in roughly the 25% cash on cash zip code. xScale is different, but then when you add on leverage plus then the fee income that we get, it becomes a very attractive return for us and also in a capital efficient manner. Can you unpack sort of like where you stand today from an xScale standpoint? I know a lot of these assets sit in sort of a JV structure. Maybe help us understand what all of those JVs look like today. Yeah, we have a handful, over a handful of joint ventures operating today with capital partners, current capital partners of GIC, PGIM, and now our newest CPPIB, where Equinix comes in with a 20%- 25% interest in the venture as a limited partner. One of those other capital partners brings in the remainder of it. As a 20%- 25% LP, you know, we have equity investment and interest in it. The joint venture itself hires Equinix to then go run the venture, construct and operate and lease the actual asset as well. You've done different joint ventures, sometimes with the same joint venture partner. How do you look at identifying different joint venture partners? What makes a good partner to you? I think it's, you know, like-minded companies who want long-term investments and want to help promote more digital infrastructure growth. That's what we've looked for historically. Okay. Any consideration of moving beyond just getting capital partners and more strategic partners? Or do you view them as more strategic partners? Because you guys do a lot of the operations, right? Yeah, we do a lot of the operations, but they're also strategic partners. I mean, look, they're putting their trust in us, putting multi-billions of dollars of capital to work, and they trust Equinix to go, you know, run these data centers appropriately. They're still very strategic for us. Okay. Let's talk about some of the developments around JV s and xScale. I think up until late last year, you primarily focused on xScale outside of the U.S. Late last year, you announced a $15 billion xScale joint venture in the U.S. Where are you with that? Yeah, so we're actively now, we've announced one piece of land that we've closed on in Hampton, Georgia, actively looking at other campuses as well. The ambition is to have a handful of multi-hundred MW campuses across the Americas region. Okay, multi-hundred megawatts. How did you take sort of learnings from xScale 1.0 and bring it into xScale 2.0 into the Americas? Given that 1.0 is, call it, eight years old, the densities and the size of the deployments were a bit smaller than where we are today. xScale 2.0, as I mentioned, they're going to be, you know, multi-hundred megawatt campuses, and customers will be buying them in, call it, 30+ MW deployments. Where in 1.0, customers have the ability to go down to a couple, five, you know, 10, 15 MW deployments. When you develop a 100 MW facility, is it one customer that's taking down that whole facility? Is it multiple customers? How do you sort of think about pre-leasing some of those new facilities? Yeah, it could be either. It could be one customer could take down an entire campus, or it could be that we end up with, you know, a multitude of customers. You've announced Atlanta, I think, as sort of your first campus. Where are you in terms of construction around that campus? Yeah, we're moving a lot of dirt around right now, is what I would say. It's several hundred acres where we're leveling and flattening the land today. We have bulldozers pushing dirt every day and getting it pad ready. Is power committed to the pad? Power, we've been working with CEGMC, who's the regional utility that we're working with. Okay. How do you think about sort of the development of other facilities across the U.S.? Where does the land come from? Do you already have it in land bank and you're sort of trying to identify either the power and get all the permitting and zoning constructed? Where are you sort of on the other JVs? Yeah, across all of our ventures, it's been a combination of either taking what we already had in land bank and contributing it into the venture to develop, or it's going out and actively pursuing new parcels of land and then securing power for that. We have both of those across all of the ventures. Do you think about xScale in the U.S. as sort of like sticking to top markets? I know we've seen some deals with, you know, Bitcoin miners, right, that are doing 250 MW deals in the middle of North Dakota. What's the value of sticking to the top 10 markets versus maybe moving beyond that? The way we think about it is generationally. You know, we've already got a 27-year operational history at Equinix and we plan to continue to be in this space for decades to come. We're not thinking about meeting one trend in a moment in time. We're thinking about durability and creating a platform that can capture multiple trends over time. If we think about that, A, we want durability. B is we have a flexible data center design that could capture AI training, AI inferencing, cloud, or enterprise kinds of workloads. If you're going to capture all of those workloads, you need to think about latency as well. Those top metros are still important to us. It doesn't mean we have to be in downtown Atlanta like you're seeing play out here with this campus. We're about 40 mi away. We're still staying very close to those metro centers because the interconnection back into Equinix is also really important for the success of xScale. Equinix has historically contributed assets into these joint ventures. What needs to happen to these assets that were probably traditional retail or enterprise facilities to turn them into an xScale property? Yeah, for those that we did historically, it was about having the right amount of capacity and the right kind of data hall that could be accommodated into a customer who needs that kind of space. Going forward, it'll be a lot more about selecting the right kind of land that we would be able to develop on. Okay. Yeah, and I'd add historically the reason why we were contributing assets in as well is that we didn't want to slow down our momentum, right? Even as we think about what we're doing right now, we would much rather go out, get started, be developing on our own balance sheet like we are right now where we said at our most recent earnings call, we're spending about $450 million or we expect to this year on balance sheet for xScale, but it's because we see the opportunity in the market and we want to keep developing, recognizing at some point we will move that into a JV and then get paid back for our spend. A lot of the development around hyperscale, is it more spec or do you have like an anchor tenant already sort of in mind for a facility? Yeah, we end up with both. We end up in a lot of instances where we do have an anchor tenant that has a start development, but we also have learned, having done this now for eight years, that the closer that you are to a customer needing a service, the more important it is that you have it available on time, and many times the price point is also increased at that point. We do both. As you've learned from sort of xScale 1.0 and moved to 2.0, I would assume some designs and architectures of the buildings that you're constructing have changed. Can you help us understand how you're designing the buildings today for the Americas JV versus what you might have done a couple of years ago? Maybe specifically focusing on liquid cooling, power densities, and just overall resiliency of the facility. Yeah, I mean, you've nailed on the things that are mattering most right now. Having such a long history with the hyperscalers and some of the other strategic SaaS operators that need this kind of capacity, we've been working with them for years on what their designs are going to look like. We do very regular design reviews, and we also go work with all the equipment manufacturers like NVIDIA and Dell and HPE and others. We know about when technology infrastructure is going to converge. Liquid cooling is certainly one of the big aspects of the design that's different right now. In the new xScale 2.0 data centers across the Americas, they're coming up right away day one of having the ability to be air cooled in a narrow amount and liquid in a larger amount or the exact inverse of that, depending on where these customers are in their journey and transition to liquid cooling. Certainly density as well. There's a great deal of flexibility from what we used to see in the, call it, 10 kW per cabinet for these kinds of deployments all the way up to, call it, more than a megawatt per cabinet. What do you think of construction timelines on, let's talk about maybe the Atlanta facility, but then establishing other facilities down the road? Yeah, I think first it's about getting it pad ready, and you know, that's a big part of the long component of construction, getting it ready for the first building. After that, you'd see the construction timeline accelerate because you've done a lot of the upfront work that's required. Think like 18- 24 months to get it pad ready and have the first building constructed. After that, you'd be able to see something pretty quickly. Okay. Let's move on. How do you monetize xScale? I think that's one thing that I don't fully understand. What's sort of the monetization strategy of sort of the xScale buildings that you're constructing? Yeah, I mean, there are two ways to think about that. One is when it's actually leased and a customer is in it and occupying it, the customer is paying for the service. That's one way you would monetize it. That's like a recurring revenue stream. That's right. Exactly. We're an equity provider. That is unconsolidated revenue due to the, you know, 20- 25% share we have. That flows through in kind of another category for us on the equity side. I'm going to let Chip, who's the smart one, share everything that I didn't get right. The second area, as I mentioned before, is that the venture hires Equinix to design the data center, to construct the data center, to operate the data center, to manage the JV, and then to lease it. There are fee structures that come in from the venture as well. Some are non-recurring and some are monthly recurring. Yeah, so in terms of right now, largely what you're seeing flow through our P&L, we get the recurring revenue fees for the fact that we're, you know, the books and record keeper. It's all of our employees who are actually running the data centers themselves. That's a small but growing portion of our recurring revenues. The bigger, lumpier part is going to be the non-recurring fees. It's going to be those design and construction fees, the sales and marketing fees as we actually lease the facilities. Right now, historically, the total fee streams we've been getting has been somewhere in the zip code between 1%- 2% of revenues any given year. That will ebb and flow depending primarily on the leasing volumes that we're doing. The other part, as Tiffany mentioned, is as we then start stabilizing the assets, you'll start seeing the profitability flowing through sort of below the line as the profits from joint ventures. The last element is, as we think about liquidity at some point, there then is also the opportunity for a promote. Nothing that we've done as of yet since we haven't monetized or our partners haven't monetized any of the assets thus far, but that is something that will be an opportunity as we look to, or as our partners look to monetize in the future. When we think about sort of the long-term monetization, you guys updated us in terms of guidance from an xScale perspective. Does that include the Americas JV? How should we think about the Americas JV specifically towards that sort of revenue AFFO contribution? In terms of the guidance that we provided at our analysts' day in late June, that incorporated our assumptions around our Hampton campus, but we hadn't included any of the assumptions as of yet around incremental land plots that we'll eventually push into the joint ventures. Okay. What would you say that Atlanta campus is of the sort of bigger picture JV in the U.S.? It's a 240 MW campus, and if you figure, you know, the JV itself is going to be about $15 billion, and it costs somewhere between right now $10 million- $12 million a megawatt to build. That's something less than a quarter in terms of the potential total build-out of the joint venture. When you say promote, that's somebody else coming and taking an ownership stake in the assets. Yeah, that would be our limited partners going in, selling off their portion of their stake in the joint venture, and depending on the return profile that they get, we can potentially get a promote on that. Got it. Can we talk about competition? It seems like everybody's building data centers these days. How do you think about sort of the competitive landscape for building and developing some of these types of assets? Anyone who's been in this space for a while knows building, constructing, and operating a data center is hard business. It's a really hard thing to do, and we've got a long track record of being able to do this. Other folks might be entering it for one specific purpose. We are in the data center space for a multitude of purposes. We have 10,000 customers, as I mentioned, across all of the Equinix portfolio. You know, we don't get too distracted about that. I love the term that you share, though. I'm going to ask you to do it here. Yeah, I mean, part of what we're seeing in the marketplace, too, and we've joked about this internally, but there is an element of braggawatts right now in terms of everyone saying, well, I'm going to build a gigawatt and I'm going to build five gigawatts. The simple fact is that as you think about a gigawatt, again, if you're building at $10 million a megawatt, that's $10 billion of capital that you have to put to work. What we're seeing even with, you know, some of the hyperscalers now going out and potentially thinking about monetizing part of their facilities or bringing in joint venture partners is that's a lot of money running after that. Not only do you have to have a lot of capital to build data centers, but you also then have to have power. You have to have all of the mechanical and electrical to do that. To Tiffany's point, we've got a very long track record and we're working not only about thinking about securing power for our xScale, but for retail, but we're also then going out and working with the critical component manufacturers so that we're not going to have to be waiting for a generator, for a CRAC unit, for, you know, a static transfer switch. We've already got roughly $600 million worth of that MEP warehoused on our balance sheet. The beauty of the combination of our industry-leading retail business plus xScale is it gives us that much more relevance to all of our vendors where we can very confidently say, hey, we're a BBB+ tenant credit. We can go and sign on the dotted line and say we're going to be good for it and then put all of that equipment to its highest and best uses, whether that be for retail or for xScale. If we just were to take a step back, how do you sort of look at that overall competitive dynamic? You got private equity money, you got self-build, right? There's all these non-traditional data centers like the Bitcoin miners. How do you take a step back and like frame the overall size of that opportunity for us? Maybe another way to phrase it is like, where are we on the AI build-out? Maybe one way to think about that is this. If we took all of the capacity that Equinix is building right now across both retail and xScale, if we offered that up to one hyperscaler, just one, not the 12, 15 odd hyperscalers plus the long tail of SaaS vendors, that still wouldn't satiate their needs for a single year. That's how much demand there is out there in the market. There is very much a rising tide lifts all boats. I think the important part for us, to what Tiffany was talking about earlier, is we're looking to build generational assets that are going to be operating for the next 30+ years. We're not necessarily going to look to build just for any old operator in any old part of the world. We're thinking about what is going to be the durability of these assets and how can we offer a differentiated type of offering and service for our customers. I'd say that's a long-winded way of saying a huge amount of opportunity out there right now, but we're going to be highly focused in terms of how we want to pursue that opportunity. Anything else you'd add? No, great. Tiffany, I wanted to ask you because you came from the retail side of the world. Now you're in the xScale side of the world. How do you sort of go about creating synergies between the two businesses? How do you sort of see them fitting together? Yeah, look, every customer we have, hyperscale down to enterprise, SaaS operators, they all have distributed architectures. They all have a different need, a different workload need or application or use case need for what they're trying to solve. Now when you have xScale plus retail plus our interconnection business, we can take these really complicated distributed networks and make them very easy for customers. That's the value that Equinix provides with having retail up to xScale. Is there like a pull, like for example, if you're going to develop the Atlanta hyperscale facility, is there a pull towards more enterprise in that, in sort of your retail business in that facility? It's probably not enough data to see that, but would you expect that to be something that happens? You know, I expect in our xScale campus that we will have interest from hyperscale kinds of customers, SaaS operators, as well as large enterprise organizations. I expect that we'll see demand from each of those segments. You've actually seen historically we've built both together. As you look at what we've done in Europe, whether it's in a Frankfurt or in a Paris or in a Dublin, generally speaking, our xScale campus will be either in relative proximity or in some cases directly next to our retail facilities. That gives us the ability to again operate across both sides of the coin. Got it. We have a few minutes left. I'd ask the audience for questions if that's okay. Yeah. Go back to the power supply. How much of a gating factor are utilities going forward here? We've been talking about grid modernization. Utilities can't do gas turbines for a couple of years from Geneva Nova. How do you guys get the power, right? Does that smooth the cycle out? It seems like there's a lot of supply going in, as Brandon said, a lot of demand. Does the power supply become a gating factor? How much does it push things to the right when you're building it? Yeah, I would start with, you know, power is certainly a challenge right now. One is we operate in different jurisdictions. Supply is different in each jurisdiction, is one thing I would say. In those that certainly have challenges, we have all of the above kind of strategy to power. Take what we can from the grid. We're also doing some onsite power generation as well. We have a turbine in Dublin. We have fuel cells, you know, in some of our locations. We're looking at different power options depending on where we are. In some instances, you know, we might need to do our own onsite power generation to bridge what the utility is able to provide us. Yeah, and I'd add to part of even as we think about some of our sustainability efforts, being that bridge, we can also then be helping as some of the grids are transitioning. Case in point, in Dublin where some of our xScale facilities are running on gas turbines. At some point we do want to connect into the grid, but as they're trying to transition to more renewables in the Irish grid, we can then become a swing demand provider so that if the wind's not blowing or the sun's not shining, we'll then turn on our turbines or back and forth. We're thinking holistically, not just about, you know, our own position, but also how do we fit within the broader grid. Other questions. Do you have a preferred sort of alternative power? Do you use nuclear? You mentioned nat gas and wind and solar. Is there a preferred sort of alternative power besides grid power? I think the best power you can get are green electrons. The best way you could get that is right from the grid. That would be the first choice. As you start to move down, it's how much renewable energy you can get and where, or not even necessarily renewable, but clean energy because you mentioned nuclear. We'll take whatever clean energy we can get. That would be the first choice. After that, it's taking whatever energy you can get from the grid that isn't necessarily clean and then using things like PPA, you know, where we have PPAs all around the world to help as well. As you can appreciate too, we're talking to just about anyone and everyone. Whether we're thinking about traditional energy sources or even some of the new startups out there, you know, someone like Oklo where we have been working with them, we actually have a reservation for one of their first generators whenever that gets up and running on a small modular reactor side of things. We're taking really an all of the above approach. Got it. Yes, question. On the same topic of power availability, have you ever turned down an allocation that was otherwise an attractive opportunity because of power unavailability? What we look at is the time horizon. Typically, power isn't available for a period of time. It really depends on for what horizon are we buying it. There are plenty of instances where we have a very vast land bank at Equinix, and many of that will buy land knowing that power is going to come in three, five, or eight years, which is perfectly acceptable as well. Yeah, and I'd add to there are differences between what we might be doing on xScale relative to what we're doing in retail, because in retail you might put up a single building and that'll give you capacity for two to three years in some cases. Relative to an xScale, if you're signing an entire building up with a single customer, then you're sold and you need to move on to the next opportunity in terms of power. Also, the consumption, if you're doing a 30 MW build or 30 MW phase and you do two phases, will very quickly consume that capacity. It will vary depending on xScale versus retail. Just to finish out, in closing, I suppose you have a number of JV s in place, you're expanding them rapidly. How do you sort of help investors understand what xScale means to Equinix over the next five years? Like what's the opportunity? First and foremost, as we talked at our Analyst Day, xScale is a huge growth opportunity for us. What we're doing in terms of the context of Build Boulder is investing across the entire continuum of digital infrastructure, recognizing that we will have customers who need to have a single cabinet in a shared cage environment like our secure CapEx Rust product, all the way up to xScale where we're going to be selling 30, 60 MW, even in some cases potentially entire campuses. There really is this broad market opportunity for digital infrastructure, but as it relates to xScale, Tiffany, anything you'd add?