Kicking off now. It's 12:45 P.M. I'm Mike Funk. I head up the telecom infrastructure software research here at the bank. Great to see you all again. Really happy to have Equinix with us once again for our Global Read Conference. Thank you, Steve. Thank you, Katie. Steve is Senior Vice President of Global Real Estate at Equinix. Get that right? Yep, that's correct. Katie is from Investor Relations. Katie does have a disclaimer she wanted to read quickly just to cover the bases, then we'll get right into the Q&A. Thank you, Katie. Thanks, Michael, for having us. Some of what we may talk about today is forward-looking in nature. Please check out our SEC filings for all of our risk disclosures. Thank you. Great. Thank you for that, Katie. Maybe to set the stage, Steve, what do you do on a day-to-day basis in Equinix? What does the Global Head of Real Estate do in Equinix? Yeah, thanks, Mike. You know, I've been with the company for almost 14 years now, largely with Corporate Development and Real Estate the whole time. My previous role, just as a way to set it up to answer your question, my previous role was running all of Corporate Development for our MEA region and before that for the Americas region. Real Estate was embedded inside those Corporate Development teams. What our leadership team has done is carve out Real Estate specifically from Corporate Development, make it its own global organization, and then ask me to run that globally. Day to day, we're looking at how we execute our build bolder strategy, which is really how do we locate land and power in the markets we need and our customers want to be. Given that's the building blocks of our product offering, it's really, really critical. I manage the Real Estate teams. We're looking at these transactions from, I guess, Tokyo to Montreal and everywhere in between. I do want to come back to the build bolder strategy later because there are a lot of questions about the strategy, but also it's kind of the market, where the market's going today. I'm going to put a pin in that for a minute and maybe start, you know, higher level. Key theme right now for data centers is obviously, you know, the demand environment, power availability, and what operators like yourself are seeing in the current state of the market, whether it's on the demand side, the ability to access power to meet that demand. Maybe to set the stage with your broader views on demand, power availability, and then how you're meeting that. Yeah, look, demand signals are good. We just had our Q2 announcement. Katie can give you sort of the data, specifically around that. You know, we closed over 4,100 deals, over 3,300 individual customers, $345 million of bookings. Just from those numbers, you can tell the demand side has been really strong. We continue to get really strong demand signals from our customer base. We have 10,000 plus customers across all of our three regions. Yeah, we are still seeing very, very strong customer demand. Mike, you were asking, how does that translate into the pursuit of land and power? Look, it's definitely a challenging environment, but we've been looking at a power-first strategy for our land strategy for about three or four years now. Really, we're looking at acquiring land or acquiring power and solutioning the land around the power, power being the key ingredient. I think the good thing is, we've been in business for a long time. We've been in these markets for a long time. We've got good relationships with individual municipalities, the individual power companies. They know us really well. We've been able to leverage those relationships and make sure that we're doing the right land deals in the right spots for our customers' growth. Another important piece recently has also been pricing and releasing. At least in the hyperscale side, the wholesale side, we've seen a very strong releasing spread. Some carriers are talking about 10%+ releasing after like about 5%. What are you seeing for pricing dynamics and colocation in the U.S. and international? Yeah, Katie, do you want to take this one? Yeah, happy to. I'd say we continue to see a healthy and firm pricing environment as measured by our MRR per cabinet yields that we're able to generate across the portfolio. I think when we take a lens of pricing, we're always very thoughtful in terms of approaching pricing with customers, just recognizing that we are the premium price provider in the marketplace, and feel like we have market permission to do so based on the superior value that we deliver to our customers. Also recognizing it's not, as Stu was just talking about, it's not getting easier to bring that capacity online. I want to make sure we're earning an appropriate return on our capital in terms of how we're approaching pricing with customers. Our xScale portfolios are generally longer leases, right? We don't have as much leasing risk, given our xScale program is not that old. Okay. That makes a lot of sense. I think in recent, probably 12 or 6 months, there's some question about where demand is flowing. Specifically on the hyperscale would be xScale for you. We're seeing builds from AI companies out of places like Lubbock, Texas, and Kettering, Ohio, places like that, right? Non-traditional data center markets. Can you just talk a bit about why or if location is still important, yeah, in data centers? That was one of the hallmarks of the Equinix business going back a long time. Yeah, for sure. Look, we continue to believe that Equinix is playing the best hand in the industry. We've been focused on location for a long time. We've been focused on interconnection-rich locations and really curating a broad portfolio of customers so that we can build an ecosystem that's got durable value, not just for our shareholders, but also for the customers, right? They want to be close to other parts of the ecosystem. Other customers want to interconnect with them. That's still going to be a focus of ours. We've looked at our xScale business as, you know, additional to our retail business. We don't see us getting too far out of these core markets, so that we can still take advantage of our interconnection and really create that durable franchise going forward. We might not be in Lubbock, Texas, for example, but we still want to be close to core markets where we can connect back easily to our ecosystems. Foundation model training is, I guess, the first step for AI, and then it's been an expectation that inference is going to pick up the slack or at least the additive, right, in terms of data center demand. I don't know if we've seen that shift yet, but part of the investment thesis for Equinix was that, given the quality and location of your data centers, you would capture a large portion of that inference demand. I think it's a more robust debate today if that's true, where that inference is actually going to sit. Can you give us your current view on why Equinix is well positioned to capture inference and what indications you might be seeing that would support that view? Yeah, I'll give Katie a chance as well. I'll say a couple of words. Look, it's early days in this adoption. We liken it to cloud adoption that happened, you know, a decade plus ago. Again, early days, but certainly inference is what we're focused on. That largely is latency sensitive. Those applications need to be relatively close to the eyeballs. You saw a similar thing when it came to some of these connectivity nodes and cloud on-ramps with the cloud deployments. Just as an example, we have over 35% of the cloud on-ramps in the markets that we're in, and we're clearly the number one provider there. We intend to do that same model and repeat that same model for AI inference. The inference is going to be latency sensitive, no question about it. You've got to have these models perform for the end customer, for the end user. We think we're incredibly well positioned with our current portfolio and the portfolio we continue to develop to be successful. Yeah, I just said on, Steve, when you think about the enterprise, particularly in terms of inferencing, like every enterprise today, like if I asked all you guys in the room here to raise your hand, like everyone's using some form of agentic AI, but really enterprises are still trying to figure out how to incorporate AI into their broader operations overall. Our customers, and if you ask anybody on your sales team, they will tell you it's part of every sales conversation they're having today of enterprises trying to figure out, okay, what data do I need for AI? Is the data structured, properly cleaned? Is it in the right form? Then how can I incorporate that in my operations? The key question everyone's trying to answer is how am I going to monetize or generate a return on this investment over the longer term? I feel like we can help customers with that and the attributes that we've built over the 27-year history of our ecosystems of the cloud on-ramps, the networks that reside inside of Equinix. Feels like that gives us the opportunity to pursue that. Yeah, the last thing I'll say on this, Mike, is our global reach is a real differentiator for us, right? We're in 70+ markets. If you look at the last place that I was in, it was EMEA. We've got 30+ markets there. GDPR is really important. Where the data resides is important. At a company like Equinix, we have a natural advantage because we've really invested in our global reach and global sales team. We can operate in all of the markets that our customers want us to be in. We continue to push out that global reach. Yeah, we continue to think location is really important. Our customers are still going to drive where we end up being. We've announced new locations in Manila recently as well. We will continue to push that global reach out. It's been a real differentiator for us. Can you translate all of that for me into, you know, the income statement? You know, how demand from inference is going to drive accelerating top line growth or even accelerating AFFO growth in your existing facilities. You're seeing stored growth, for example, your occupancy is relatively high, right? I don't think you've seen a lot of increase in price in those. Is it primarily through taking more price from inference customers? That requires some churning of legacy customers. What is your capacity to add capacity to legacy facilities? Are they bringing in more power or space? How do you, I guess, translate the inference demand that you're talking about into greater top line growth, AFFO growth in the existing facilities? Yeah, I'll let Katie jump on that first question. I'll come back to your, you know, how do we look at existing facilities? Yeah, I would say to start, thanks, Steve. I would say overall, when you think about the inferencing opportunity, it's continuing to add to the ecosystem overall. In many respects, we see AI as another ecosystem to cultivate inside of the Equinix platform and making sure we're cultivating those highly magnetic customers in terms of their networking nodes or things of that nature inside of our facilities. Part of, and you heard this from us at Analyst Day back in June, is as you think about our build bolder strategy that we've talked about, it really is in response to customer needs. As you mentioned at the top, we have such strong customer diversity that we're not beholden to just one technology trend. Yes, AI is very top of mind and very exciting, but there's also broader digital transformation. There's hybrid and multi-cloud happening inside of our facilities. It's just the continuation of building out those ecosystems and customer deployments to making sure we have the capacity available across the portfolio when and where we need it. Yeah, and just on existing data centers, we spend 3% of revenue on our existing data centers to improve them, to replace aging equipment. About 1% of our CapEx goes to that. Really, we're focused on developing the next generation of data centers to further our AI strategy. It's going to require a lot of capacity. Certainly, you've seen us announce quite a big expansion into our CapEx program, about $3 to $5 billion annually is what we've announced. On the electronics scale, correct? No, no, no. In terms of the CapEx that we outlined at Analyst Day back in June, of the $4 to $5 billion, it's roughly $3 to $4 billion per year of CapEx to support our retail business, with about 80% of that going towards expanding and bringing on new capacity, and then roughly about $1 billion per year of land purchases and provider share of contributions to the xScale joint ventures. Yeah, which is about 20% only, right? A lot of this is we are still seeing, and I think the message you should take away here, Mike, is that we are still very bullish on our core value prop, which is retail colocation, right? A lot of that capital is going to our retail business. The primary share of that capital is going to our retail business, which we still see a ton of growth there. This is a shift that can probably, you know, more to your primary goal. I mean, you know, how do you evaluate for, you know, for site selection, you know, procurement? How do you manage those different pieces of your role and then, you know, selecting a select negotiation? How do you manage to make sure that you have enough equipment on the procurement side, that your build times are on time? How do you manage all that? That's a great question. Let me highlight a couple of teams that don't report to me, but I work very closely with. One is the public policy team. They're great. They work hand in hand with the real estate team to create, as well as local leadership on the ground. We have great Managing Directors in every one of the countries that we're in. We all work hand in hand to work with local authorities, to work with local power providers, to make sure we've got those really good relationships so that we can continue to grow in those markets. The other team I'd like to highlight is our procurement team. I think we've got 1.4 gigawatts under control of forward equipment. We're pre-buying cooling and power equipment so that we can continue to deliver these sites on time in a predictable way for our customers, which is really, really critical. It's never been more complex than right now. I think Equinix has great talent that we've grown up in the business, as well as folks coming in that really know how to operate a complex environment and really scale the business. Things like our pre-buy program have been great for us. Again, having control over 1.4 gigawatts of capacity just in the kit you're going to deploy, I think is a really powerful message. I would just add on too, we also have a pretty holistic, you know, power team. Thinking just about power availability to make sure we have the power needed across the portfolio, we also have a dedicated team thinking about, you know, our sustainability efforts and renewable energy coverage, recognizing it's very important to our customers and the communities in which we operate. We also have a team that's focused just solely on like our power purchasing as well. Having just that in-house expertise that we've built out over the course of our 27-year history continues to be a differentiator for us. It actually blends in on my next question, which was, you know, how far before you break ground, you have to actually secure power? I don't know if either one of you have a sense of the sequencing of the timing around securing power versus, you know, breaking ground in the facility. That's a good question. I don't know if we look at it exactly that way, Mike, but let me go back to what I said earlier, which is we're securing power first. In some markets, you know, you can secure power. In the benefit of land, a lot of markets you cannot, right? We're locating where the power is and then solutioning land around that so that, you know, when we come out of the ground with a project, we have the power solutioned already. That's really, really critical for us before we, you know, start breaking ground for a foundation. We know where that power is coming from. We've got it secured and that we're coming out of the ground with a project that can be powered. Can you just remind me how much power you've actually secured today? How much you have contracted? I don't know if I've got that. In terms of what we shared at Analyst Day, from a utility procurement perspective, there's roughly a gigawatt secured, and then another two gigawatts are either applications in progress that we've submitted. The team is continuing to pursue other additional opportunities behind that. Okay. Katie, you mentioned earlier in Equinix that's always been at the forefront of alternative energy and trying to go down that path. Can you just remind me how much of your power you're currently getting from alternative sources, what your target is, and how much of that you've actually contracted? Yeah, it's a good question, Mike. In terms of power, typically we are tied into the utility grids across the markets in which we operate. As you mentioned, we operate in 70+ markets around the world. Power availability and the availability of renewable energy is going to vary quite differently across each and every one of those markets. From a renewable energy perspective, we talk about it in terms of coverage, just given that at the size and scale in which we operate, you know, if we put solar on our facilities, that's not going to cover the entire load of the building. We typically look for our preference for virtual power purchase or power purchase agreements with either solar or wind farms where we're adding additional green electrons to the grid, recognizing that that might not be available in all the markets in which we operate. We'll use a variety of other different mechanisms such as energy attribute certificates or REFs to meet that need. From a holistic power availability standpoint, we do continue to take a long-term lens on all different types of power across the portfolio in terms of what we're able to support. There have been a couple of instances that we've actually done self-generation across our portfolio to meet the needs of our customers. It's kind of a tool in our toolkit in the event that we need it, whether that be natural gas turbines or fuel cells. We have a variety of different options and continue to take a long-term lens in terms of looking at other power options as well. Yeah. I'll say, again, we stay very close to our national partners as well as local partners when it comes to this sort of thing. Governments around the world are looking at what are the alternatives to their current needs of power sources, including SMRs and other things to help fuel the digital economy. Governments around the world don't want the grid or inner capacity crunches to be the limitation on their own digital transformation. It's not just competitive inside the country, but they're competing with other global markets, right? Even at the national level, there's multiple countries that we're working with that are looking at how do we change the narrative? Do you think SMRs is a viable short-term solution? Most estimate probably five to seven years before, you know, the kind of the cost analysis makes sense for SMRs. Yeah, look, I think there's some challenges with SMRs for sure. I mean, you've probably seen Katie talk about some of our announcements that we've made. It's just one of the technologies that we're following and are looking at. I think there's challenges around SMRs, but I think it's really got to be a mix of those technologies, right, that are going to be the solution. Said, Steve. There's been a perception in the market that Equinix, being the leader by far for years in terms of quality of location, and your customers were effectively able to accept whatever price was out there because they had to be in an Equinix facility, right? The perception is that maybe the customer service relationship management wasn't maintained the way that it could have been during that period of time and that you've lost some deals recently or maybe the customers didn't come to you because of that historic relationship and the perception, right or wrong. I think there was a recent management addition, right? I forget the top Chief Revenue Officer added, but I think in part it was to help rebuild the customer relationships and management. If I'm right, can you just tell me what you are doing maybe to change that interaction, the go-to-market with your customers, and change that perception? Do you want to start, Katie? I'll get some comments. Perfect. I'll start. I will say we did have a recent new addition, so Shane Paladin joined us over the summer as our new Chief Revenue Officer, backfilling a role that our CEO, Adaire Fox-Martin, was actually wearing the interim hat as interim CCRO. I would say at Equinix, we've always put the customer at the center of everything that we do and want to be, you know, long-term partners to our customers. That continues to be our guiding light as an organization. I would say as you think about our strategy that we outlined at Analyst Day, when we talk, we're talking about, you know, serve better to our customers. That's really making sure that we are delivering exactly what the customers are looking for and how we can be long-term partners and solution providers to our customers and having that holistic conversation with them of not just about their infrastructure needs today, but their infrastructure needs over the next three, five, ten years plus and having that long-term customer relationship with them. Steve, do you want to add on? Yeah, I'll just say, all of the execs on our leadership team, our C-level execs, the next row down, like myself, Senior Vice Presidents, Vice Presidents in our company, we all meet with customers. I'm going to fly back home tonight to meet with a customer tomorrow morning. I think that's really, really critical. Not just our C-level execs, but guys like myself who are on the front end of the business, who are, candidly, kind of far away from the sales motion, right? You know, procuring land and working with the power team, et cetera. It's really important for all of us to hear what our customer needs are. Where do they want to be? What value are they creating out of Equinix? I would say, at least from my lens, Mike, the customer is the most important thing. I go to customer meetings, even in my job, because you would think I'd just be kind of kicking dirt all day. No, I do customer meetings quite a bit to make sure that the whole company is really customer-focused and customer-sensing. That's what I'd say about that. In those conversations you sit in, what's the common thread for what customers want from Equinix and where they're going? Yeah, look, I think a big topic is new markets. Like what new markets our customers want, that global reach. They love the fact that we're global and they can have a conversation to us about Manila, right? Or Joburg or wherever, names of the new markets that we've been in. The reason why we are going to those new markets is because we're customer-led for those markets. A lot of the conversations I have is, hey, look, you know, Equinix, this is where we need to be. Here's the application we want to put there. How can you help us? It's really about like, you know, hey, you know, what does our entry to that market look like? Are we going to do greenfield there? Will we acquire a business in that market, etc.? The other part of the customer conversation is around like, you know, what kind of deployments do they have? Who do they need to connect to? Where do they need to be relative to their existing data? How many milliseconds away? What is their latency requirement? How does that interact with their existing deployments and their existing requirements? You touched on latency requirements. In these conversations, do you see latency requirements increasing or decreasing? How does AI and inference off the foundation models affect the latency needs of your customers? More and more customers that we're seeing are saying, you know, look, we need three or four locations. Let's just take Europe. That's where I last moved from. We need three or four 5 megawatt locations, and they need to be X milliseconds apart. That's a different conversation than we used to have, which was like, I need to be in Paris and Frankfurt, you know, with 250 kW. That's really how the conversation has changed. They're seeing, you know, application level performance as the most important ingredient and how Equinix can really impact that. What are the applications or use cases? I don't know if it's about 10, 20 milliseconds on what kind of latency you're talking about, but what are the applications or use cases that are driving latency requirements to a lower number? Historically, we saw that everything requires 10 milliseconds or less, which seems like autonomous driving, right? Maybe real-time 3D, things like that. Most of the applications could handle higher latency, right? What are the applications that are driving your customers? I think sometimes we can get lost in the AI boom a little bit and what that means to Equinix. Look, we still handle millions and our customers still handle millions and millions of digital payments, for example, right? Trading for New York City today is a huge part of our ecosystem here in the New York City metro area, right? Those kind of things are all very, very latency sensitive, right? I don't get if you have any other examples coming to mind. I wanted to shift to xScale for a second and what you think that the legacy Equinix portfolio or brand adds to the xScale portfolio, how bringing those two together maybe is greater than the sum of the parts. Yeah, for sure. I think that's really true. I think, you know, when we look at our build bolder program, we want to be doing things at a much larger scale. Part of that is, you know, co-developing. In my part of the business, there's no difference between xScale and retail, for example, right? My team is out there solutioning real estate and power for the entire portfolio. For us, it's really the ability to get some real scale out there, develop full products for Equinix, and be able to just become just a lot more efficient. Certainly, we've got our capital partners, right? It doesn't sit on our balance sheet. You know, like Katie said, there's contributions that we make when we develop that into the JVs, et cetera. I think in the market dynamic today, there's a view that the private operators build and operate at much higher levels. Even just off balance sheet for you, but, you know, some are operating at 10 or 15 times net debt to EBITDA, right? Also, maybe to take more risk on where they're placing assets. It is winning a higher% of these larger deals. How does Equinix compete with that private company able to operate at higher leverage and, you know, maybe wanting to chase deals in the second and third-tier markets? How do you compete with that? Maybe you don't. Maybe you feel your sweet spot isn't chasing the next big AI deal. Maybe it's more, you know, leveraging your existing portfolio of customers. We're not out there from that side of our business trying to grab a bunch of market share and grow from an xScale perspective, right? We know that's not our core business. Our core business is what we're putting all of our capital in, which is kind of amazing if you think about it. The capital numbers that Katie was talking about earlier, that's going to our retail business, right? That still has a ton of growth to it. We're not relying to hit our growth targets nearly on xScale and chasing those deals. Yeah, and I would just add on when you think about our xScale initiative, and we are certainly really excited about the xScale opportunity when you look at our plans for xScale 1.0 and xScale 2.0 at full build-out. As Stu noted, when we think about xScale, it's really being able to have that full product continuum conversation with the various strategic subset of our customers and being able to service their needs on the retail side. If they need a cloud on-ramp or a networking node, we can service that in the retail business. If they want to do something on a larger scale side, when they say, "Hey, Equinix, we need 10, 15, 20 plus megawatts," we can service them on the xScale side. It really is for a strategic subset of our customers and having that full product continuum to be able to give them the right application in the right data center. Yeah, the reason we're in the xScale business is because it was a customer-led thing, right? They wanted us to be in that. There was demand for them. They were asking for it. Exactly. I'm going to open to the audience here in one minute, although, you know, Spector's team always has the Spector three questions they ask each company. I'll make sure I get those in for him. First, either one of you, when the Fed starts to cut, do you expect borrowing rates for long-term debt to, and there's multiple choice here, decline, stay flat, or rise? I have to give that one to Katie. Put your macro hat on. I'll go with option A, decline. Decline, okay. The second question, last year, the majority of companies stated they're ramping up spending on AI initiatives. How would you characterize your plans over this next year? Higher, flat, or lower? I would say higher. We're absolutely incorporating AI into our operations and just how we can become more efficient as an organization. A great example would be we are leveraging AI to create digital twins of our data centers to help us manage the energy efficiency and how we're deploying and looking at hotspots across the data center. We are looking at ways to continue to incorporate AI into our business overall. I'd say higher. Do you know who you're using for that? Is it Bentley Systems or Autodesk? I'm just curious. Put me on the software hat back on, right. I'll get back to you on it. Yeah, exactly. You're not the first person to ask us that. Yeah, it's full technology. Last one, and then sorry guys, you can jump in. Do you believe same story in OI for your sector will be higher, lower, or the same next year? I think overall we continue to see a healthy and firm pricing environment. I would say, I'll say higher. Okay, so number one. Thank you for entertaining me with that. We have a few more minutes. If there are any questions from the audience, I'll have to repeat them if you have any, please. No takers? Okay, perfect. Let me just go ahead and wrap it up with one more. Going back to, going back to analysting, I think there was a little confusion just around some of the messaging and the impact from the higher interest expense, right? I think last quarter there was some clarification offered around that. Can you give us the latest on that, Katie? Yeah, I would say thanks, Michael, for that. Coming out of analysts, they wanted to be responsive to the feedback that we heard from the street. The Q2 earnings call in July was our opportunity to really update and provide you guys a little bit of clarity in terms of just the key questions that we've been getting. One of those was just our assumptions around interest expense. As we noted on the Q2 call in July, embedded within the long-term outlook that we gave at analysts, both for the refinancings and the incremental debt issuances, we're assuming that those are done at 4.9%. That is a blended composite of continuing to access lower cost currency markets before returning to the U.S. capital markets. Great. Thank you guys very much. Thank you all for attending once again. Have a good day. Yeah, thank you, Steve. Thank you, Katie. Thank you.