Research at Bank of America. Happy once again to be part of the REIT conference. It is funny, I popped in the presentation this morning with Ken Caplan from Blackstone, and it seems that the entire conversation was data center development. I was joking with some investors earlier that a year ago, nobody wanted to talk data centers. Now it seems to be taking over the entire conference. Really happy to have Equinix here with us again this year, who, as you know, one of the earliest, most established developers in data centers. Thank you both for being here. Yeah. Happy to be here. We have Stu, who is the SVP of Global Real Estate, and then his colleague as well, who heads up the Americas, and they both have like quick intros. Yeah. Okay. Stu Thompson. I have been at Equinix for 15 years, mostly in real estate and corporate development roles. Before global real estate, I ran our corporate development team in EMEA, and before that, in the Americas. Great. I'm Arquelle Shaw. I'm the President of the Americas, and prior to that, I was responsible for running Americas sales for the last six years. About seven years, right? Seven years in total. Yeah. That's great. Thank you both. I mentioned the heightened investor interest earlier, and Equinix recently, reportedly expect to invest, what, $5 billion-$7 billion annually from 2027 through 2029, excluding M&A. You've expanded your development portfolio budget significantly. I'm curious to know, from your perspective, what changed within Equinix to support that level of higher development activity, and what's changed in your view of the industry to also support that? Yeah. We're just a very customer-centric organization. All of that is really because of the demand signals. Folks like Arquelle before this ran Americas and did such an amazing job. Our go-to-market team is super strong. Obviously, there's a lot of market tailwinds behind our back as well, sort of guiding that. It's really just strong performance, and we pulled forward some of our builds that maybe we had one or two more phases to go, but we pulled them forward to match that demand. Then we significantly increased our portfolio of powered land to match demand. That's why you see that $5 billion- $7 billion rising. A lot of that's going to our core markets. Most of that capital is going to markets where we have existing ecosystems. We've got great visibility into customer demand there. Really just leveraging what we've been doing for the last 30 years. Part of that same question, maybe for you, Arquelle, and you also, Stu, but there are two pieces or questions that I hear from investors. Going back to number one, what gives you confidence in developing at that scale? Yeah. What signals are you seeing from clients, conversations you're having? Then the development deliverable. Yeah. The ability to deliver on time and on budget. The pieces to that today that worry investors are, number one, labor availability. Yeah. Right? Yeah. Second, power delivery. Then the third, I think an increasing in intention is the political pushback. With the elections coming in November, I think 20 gubernatorial candidates now officially opposed to some degree to data center development in their states. So in that very broad lens, why do you have confidence spending that much and the ability to actually execute on development? Yeah, the key of that last point is to some degree. Yeah. I'll let Arquelle address some of the demand. Look, our customers have really been very transparent with us, and we work very closely with them to make sure that we're matching the demand that they need to continue the digital transformation, to really roll out those important applications that they've got that are critical to their businesses. So we feel like we've got a very, very good window into demand where I think some of the providers might not. So for example, Mike, we've got 11,000 customers. 500,000 cross-connects. That gives us a very, very good insight to what's actually happening on the ground when it comes to this whole digital transformation and AI. I don't know, Arquelle from a- Yeah. Demand side. I'd say having led the sales organization for six years, I think what you said is accurate. There's just so much growth that we're seeing in the customers as they think about the, it's a bit of an evolution we've been on for years now in terms of moving from a single cloud to hybrid multi-cloud. Digital transformation, the growth that we've seen in the economy has been significant and is driving a lot of that for our customers. I think we don't do anything that's speculative. We don't say, "This would be an interesting market. We have power available. We don't have any customers, but let's give it a shot, and let's see if we can direct customers there." We invest and build where the customers are, where we know we have market opportunity, and a lot of that is driven by what our customers are asking us for. Almost 11,000 customers with very, very significant Fortune 500, Fortune 100, Fortune 1000 in there who are driving where they need to have that capacity. For us, we've been partners with these customers for such a long time, and we've built relationships where we've become trusted advisors. We're working with them in terms of investing. We've made decisions to make these investments in core metros where we see the greatest amount of growth for us. That's how we have confidence in what we're seeing. Great point. Let me just address the other question Mike that you had about the political environment. You know how I avoided that one. Yeah, I saw you. It was very nice. Look, it is definitely an issue. I was telling a few of the groups that we have met with yesterday and today, no one really knew what I did before. I would tell them data centers, and they would look at me confused, and I would say, "Oh, it is internet infrastructure," try to come at it a different way. Everyone knows what a data center is today, or at least they think they know what a data center is today, right? I think there is a lot of misinformation out there, et cetera. Look, fortunately, we have got 30 years of a track record of doing what we said we would do, right? Relative to the communities that we are in, relative to the power providers that have trusted us with that critical capacity. We are leveraging that experience to make sure that we have got a healthy pipeline of development going forward. Is it an issue? For sure. By the way, I am going to tell you a strategy, which is nothing new for us, but before we ever put a shovel in the ground, we are in that community talking to local authorities, talking to the community, and talking to the power providers to make sure that we have got a strong relationship, we know what the community needs, and that we are being a good partner. Really, we have set up really local infrastructure businesses where we have got local managing directors who speak the language, who have really good ties to the community, and are really running critical applications inside of our four walls, right? That community of those businesses, a lot of government agencies, et cetera. We're not just cranking out massive data centers with one or two customers in it. There's really critical applications there are running people's critical apps that help them live their daily lives. That said, my world used to be spent about 90% on corporate development. Now I would say it's easily 60%- 70% on politics and being involved in our strategy, our public policy strategy. Yeah. Meeting with elected officials. We recognize that right now in the current environment, really making sure that we're invested in working with elected officials, constituents, power companies, the different stakeholders that tie into that is really important. The industry as a whole really needs to do a better job of telling the story. Yeah. Again, I think there is a lot of misinformation out there. We need to do a much, much better job of getting our story out there. We totally recognize that, and we have got a really good strategy of doing that, both on the ground in the communities we work in and nationally. To pull up this point, what are the implication of Anthropic saying that the industry needs to slow? Yeah, we have been talking about that. That's a good question. We were just talking about it all day. Yeah. Yeah. I can give my view as well. I can too, but yeah. Look, a lot of what is getting discussed over the weekend, over the past couple of days is some of these leading edge models, right? They've got some real concerns about. There's still a lot of AI models that our customers are using that are incredibly powerful that can really be leveraged by these institutions to transform the way that they need to transform. Look, you heard that conversation sort of migrate over the last few days. Saturday it was, "We need to slow down." Monday and Tuesday it was, "Okay, well welcome regulation," right? I think that's probably where that conversation really goes. But for us, we don't see that impacting our business at all. Strategically, you're a massive player, notwithstanding the premise of the original question of $5 billion-$7 billion annually for the next seven years. Theoretically, if new development was de minimis, on balance, as a large global footprint, would that be a good thing or a bad thing for Equinix? Which- No, tell me. You are operating, you have thousands of leases coming due or in negotiation on an ongoing basis. You mean leasing spreads being even more positive? Yeah. Lower cap rates on in-place capacity. Exactly. Obviously lower growth rate, less development. Less external growth. True. Higher internal growth. Same store, in a while be higher. Yeah. On balance, is it good or bad? I think- Cash flow. I think I understand the question. I think on balance it's good. We are competing incredibly well. We have a retail business. Our average length of our agreements are three years, not like every 10, 15, 20, right? We continue to see upward pricing. Pressure's not the right word, but opportunity. Does that answer the question? I think I know where you're getting at. Historically, you guys have got, what, 27% returns or so on development. On the $5 billion-$7 billion stabilized return, what are you targeting? Low 20s. Low 20s. That means on $6 billion, you are going to get stabilized NOI of what, 1 I am not quick enough to do the math in my head. Okay. But yeah, we are targeting 20+ cash- on- cash returns on that investment. How do costs and interest rates impact that? Sounds like an IR question. We are certainly impacted by interest rates, right? There is no question about that. The good thing is we are a big global company. We have got relatively sizable businesses in low interest rate markets where obviously we cannot get too far out of our skis raising capital in some of those markets, relative to the cash flow that we have. But we have got a very good team, and I think we have got one of the best balance sheets in the industry. So it certainly does impact us, but I think we have got a great strategy around that. Yeah. We have got relative advantages on both fronts and more. Obviously, the updated outlook that we gave did not necessarily assume current pricing on debt. When you are deploying capital into these mid 20% returns, obviously it is helpful to be able to weather this type of pressure. We are operating our business and building it for the medium to long terms. What is the typical half-life to stabilization? I think we have announced two to three years to stabilize an asset. Okay. So within two to three years, you are getting another $1.2 billion of NOI. Okay. That is pretty good. Yeah. Well, in terms of capacity delivery at least, we will almost double the size of our portfolio. So we will deliver more over the next three to four years, or about as much over the next three to four years as we have in the past 27. Real growth. Yep. Given the rapid development in technology and everything, has there been a big change to our sustaining or maintenance CapEx? No, the MEP is becoming more and more resilient, I would say, honestly. I don't think we've changed our guidance on that. Yeah, no, maintenance CapEx is sort of low single digit percentage of revenues, which I think is lower than a lot of people would think it would be. The reality is that a lot of our older properties are maybe more relevant today than they have been in a while, partly because they serve lower power densities, which serve things like networking. All the new stuff that's happening with technology, sort of straightway, but also AI, depends on the networking that is housed in those old data centers. So, not too many products out there, not too many real estate types where you can say that your older stuff is still very relevant today. What kind of CapEx is not included in maintenance CapEx? Like you've got to update servers, install. I don't know who pays for that, but It's our customers that update their own equipment. We are just providing the space, power, and security for that. Let me just add one more thing on that question. We own a lot of our real estate and our assets, and so where we have redevelopment opportunities to increase the yield on a piece of real estate, we will do that from time to time as well. That's a real competitive advantage for us. The 20% target, is that based on market rent today? Yeah, that's our current underwriting, yeah. You mentioned there's a lot of misinformation out there. You're right in the middle of it. Do you see it as a campaign by foreign actors to slow the U.S. data center development down? I've certainly read some stories about that. Look, I do think people have real concerns for sure. I think if you look at some of the data coming out of social media, there's no doubt there are other actors fanning the flames, but they're real concerns. We're not going to shy away from them. We're happy to do our development upfront, in the community, be forward about what we're building and what kind of value we're bringing to these communities. That's something we've always done. We've done partnership programs with local universities for a long time. We heated the pool for the Paris Olympics, the swimming pool for the Paris Olympics. We've done a lot of things, I think, to really differentiate us in the community. Yeah, I think some of the concerns are real, for sure. On this return question and CapEx question, the obsolescence of, and the depreciation of the old techniques of your building is pretty substantial because about 30%- 40% of your building is AC. Everything but IT, but everything but real estate. I'm always trying to figure out how do we think about the low percentage of CapEx in terms of the new value depreciation of this 30%- 40% of the overall value of the building is over 20 years or 25 years. How should we make the reconciliation between low CapEx but high depreciation on the other side? Feels like a Ryan question. It goes back to what you just said, which is we build the building, we build the shell, we provide the interconnection and the power. Therefore the depreciation structure and the CapEx structure are very different than other property types, but also different than if we own the actual hardware that was in the building. Yeah. Some of our equipment is 40-year lived. As long as you are maintaining it well, which we do, then it can last for quite a long time. And where we have to update it, we update it. Can we skip to power? Can I just say one more thing? I am sorry. Please, Stu. Give me 2 more seconds. Sorry, I just thought it. Yeah. Look, I think one of the ways that you can see this coming out in real world data is not only in our maintenance CapEx, which we disclose, but look at our performance. Five nines. You can't operate to that level of uptime with shoddy equipment. You just can't do it. You can look at that data point as well to see, okay, how well is Equinix doing on a performance basis operating the kits they're operating? Yeah. Sorry. Power. No, please. I mentioned it really briefly, but BofA forecast about 100 GW for fall and power deliver over the next four or five years relative to power demand in North America alone, right? You probably talk to customers about this as well. Yeah. Stu, how are you de-risking that? How is Equinix de-risking that? Yeah. How much contracted power does Equinix have relative to the $5 billion-$7 billion development spend? Yeah. So what we disclose is we own and control 3 GW of design and power today. Yeah. Roughly, 600 MW, 700 MW of that is under current development, some sort of development, whether that is earthwork all the way to vertical construction and finishing it. We should have about 1 gigawatt under production by the beginning of next year. You guys may have heard the term bragawatts before. We're not in the business of announcing projects before we have control. That you're in queue to be in queue to get power and fiber. Yeah. That's a really big deal. Yeah. The balance, let's say at the beginning of 2027, we have a gigawatt under production. The remaining two, we feel very good about. We have very good line of sight into the power and permits for that capacity. Okay. Can we shift, I guess, more away from maybe some of the risks or hurdles that are being talked about to the opportunities for growth? I think shift from model building to AI inference, something we all talk about a lot. That goes back to the risk of Anthropic and OpenAI and what their credit rating is. But you're not playing there. You're not building data centers in the frontier markets. That's right. You're retail colocation for the most part. Yep. The idea is that you would benefit more from AI inference. No doubt. As enterprises begin to deploy that. We forecast AI inference going from, say, 25% demand to 45% the next two years. Are you seeing proof points and having conversations that support that forecast? Can you talk about how much of the demand that you have been reporting on bookings or other metrics has been AI inference related versus more traditional? Yeah. Can I start? Yeah, I'll start and then pass it to you. Got you. If you had asked me this question a year ago, it would be a different answer. We have talked about this in a couple of other meetings. A little over a year ago, we had a client advisory board, and I posed the question to the customers, and we are talking big financial customers. Fortune 500s. I asked them where they are on that journey, in their AI journey. 95% of them in the room said, "We have not started. We thought about it." There was one who was a tech company that was on that journey. We met with them again a year later. I asked the same question, and every single one of them has started. They are in different places. I would say one comment that was made was training wheels. They absolutely have been forced into the accelerated implementation of an AI strategy. An AI strategy is, it is not just the infrastructure. It is an entire shift in a business operating model in some cases for a company. So it is a multi-year change that is happening. Now you ask me that question, and I do not know that I have an opinion on the exact number, but we are absolutely seeing an increase from our customers in terms of what they are buying. We had seen the majority of our business still from a perspective is non-AI related. Customers have been on that multi-cloud journey. They are building out digital infrastructure. Now they are building out that digital infrastructure to accommodate AI. We are starting to see them utilize AI much more, the inference component of it. Yeah. We're still doing business with those AI participants as well, right? I think neoclouds, I think everyone's concerned about creditworthiness of neoclouds. Look, neoclouds are a very important part of the AI ecosystem. Yes. They tend to be pretty magnetic for our other customers, right? They want to be close to them and get that AI inference out to the eyeballs, which is best done at Equinix highly interconnected data centers. It's an important vertical for us. But that said, it's only like 1.5% of our revenues. I think that's- Today. Yeah, today. Yeah. It's not like we've over-levered or over-rotated to that vertical. Are you projecting greater cross-connect density over time as well if you have more AI inference? Because, in theory, that would require a lot more cross-connects. Yes. No doubt. Okay. Companies have their data in many different places. Presumably returns go higher than even the 20%+ over time if you get higher cross-connect growth. That is an historic metric, that 20%. Yeah. That's for pre-AI inference. That's what we're currently underwriting to right now. Yes. Okay. Then we're- I think the great way to think about it is that there is some upside in interconnection that- I think we also think we are very bullish on our interconnection product, and feel that, not only because we have these incredibly dense ecosystems where you have so many customers that live within it, along with the providers, the clouds, the network service providers, et cetera. But we have over 522,000 interconnections globally. And we start to see with this, to your point on AI inference, that creates a much greater demand for interconnection as you have data residing in different places that ultimately needs to get placed where the user is. Needs to talk to one another. It needs to talk to one another to have any sort of value. We have the most cloud ramps of any other provider in these things. Exactly as well, so customers can access their data. Yeah, exactly. We think that we are in this very unique position based on our scope and the customers that we have to see significant growth come out of it. As Adaire would say, our CEO would say, "We were built for this moment. Yeah. We see that continue to increase. We look at that as an incredibly important potential driver, more so than space and power in the future. If you think about what AI Much higher. Much higher. Much higher margin. Yes. Arquelle, you are in the front line of the customer discussions, negotiations. What I hear from large hyperscalers, different than your model, is that negotiating power has really shifted to the developer, given the tight supply market. Things like assignability, end of lease, and absorbing more of the cost increase, not your model, but same dynamic. Are you seeing shifts in negotiation, whether it allows you to put different provisions in the contract you were not able to before, change in duration, escalators? Is there any change in those negotiations or contracts given the environment? I think no. We have not started to see that shift yet. Yeah. Again, I think it also depends on where you are in the customer segmentation. Right? If you are a very key service provider at the high end of the market, we're going to have a different conversation with you, and we're going to have different contracting terms with you than we are with a mid-size customer. I don't know if you were seeing anything No, I think that's right. that would come through. We've focused on a lot of volume. You've seen our volume increases, as Ryan's mentioned in some of our conversations earlier, and we're looking at the exec level, what we can do about pricing. Okay. For sure, there are market dynamics that would be in our favor from a pricing perspective going forward. I guess kind of same line of thought, I think that 30% of your cabinets were pre-sold last quarter. That's right. Right? Does the supply-demand dynamic shift your strategy to pre-selling, meaning that an inflationary environment, maybe you pre-sell less because you have a higher rate in the future, or does it shift your approach to that? Yeah, I think for us, one, it helps us figure out what that demand looks like. As Arquelle mentioned, we are spec-building data centers, but we're not just doing it without any customer data. We're doing it with a lot of customer data based on, again, 11,000+ customers. We've been in these markets for a very long time. But pre-selling allows us to get even a better window into what that demand Yeah shaping should look like. We're not going to pre-sell an entire data center out to two or three customers or even 10 customers because we do want to do a mix of that to make sure that we're optimizing the cash-on-cash return for our shareholders. When we build a data center, we actually, as the shovels go in the ground, talk about, we've actually built into the business case which customers we're going to put in there, and not necessarily the customer by name, but a small, medium, and large footprint. What we call a large footprint, a large customer, that's like a mega plus customer. That's built so that we can get that rate of return on that asset. When we then build it and then fill it, we are very careful. We look at asset management very closely to make sure that, one, we're addressing that we've got the right mix of customers to give us that rate of return. Two, the ecosystem is so critically important that we've had conversations with customers about, we're going to place you somewhere else that's going to meet your needs, but not there because in this ecosystem, we need this set of customers, because that's the value that our other customers are asking for. We manage all of that through asset management, and it becomes really important in terms of when you're looking at how much you're going to pre-sell. That's also understood because first of all, we're not going to, as you said, sell out an entire data center to one large footprint or a couple of large footprints because it would ruin the model that we have to have for the rate of return. The gravitational pull of having those core anchor tenants. Exactly. Yeah. We also look at, we want to save some of that because there's an opportunity associated with that as well. Okay. It goes into the model. Stu, kind of back hat talk, the maintenance CapEx a little bit, different direction, though. The power density with AI, because we only the same thing with AI inference. Can you talk about how your data centers are future-proofed, if they are? Yeah. Yes. Right? The power density you can support, and what is required to upgrade a data center to support AI. Yeah. Look, we have a very large portfolio of assets, anywhere from pretty low density assets that are highly interconnected, that are basically network, just network nodes, right? Yeah. That don't require a ton of power density, to some of our newest assets. Arquelle is reminding me, like- Those are more the NAPs or- Yeah. Yeah, exactly. Yeah, exactly. Yeah. We really are sort of the core, sticky pieces of the public internet in a lot of ways, right? That does not need a ton of density. Then you get all the way up to some of these big AI workloads. Yeah That might require a lot. Arquelle is reminding me of one of our latest builds in the U.S. is up to 18 kW per cabinet, right? That is the average, right? So we are pre-plumbing all of our data centers for. Shortly, that would've been maybe five or six. When I joined Equinix, Right? Yeah it was like three. Yeah. Yeah. Four, we were like, "Oh, that's crazy. Super dense. Yeah. Super dense, 4 is a lot. It's accelerated very quickly. Okay In a short amount of time. Yeah. The delta between like in the time I've been here 5 kW, 6 kW per cab. Yeah In the last six or seven years. Yeah. Now we're up to 18 and growing. A lot of times, we are also leaving some generator spots as well, so we can even increase the density above that, making sure that we've contracted enough power that we can stay with that growth. Again, pre-plumbing the data center for liquid cooling- Chip cooling all of that stuff. Look, again, it's not as easy for us to just say, "Okay, it's going to be 40 kW per cabinet for this single customer," because that's the spec and that's the chip set they're bringing in to deploy. We have to have our ops team Tetris in, sometimes hundreds of customers into these very large data centers. So it's a real technical challenge for them, but one that we do very well. Our stabilization rates, I think, across the portfolio are like 88%, something like that, stabilized. So, we do a really good job filling those spaces up. Okay. No, that's great color. Arquelle, I want to come back to just sales and support in general. I think perception from the outside with Equinix has been superior for so long that maybe you didn't have to focus as much on sales and support as competitors. Because customers felt they had to be in an Equinix facility. Oh, okay. Might be wrong, but that's the perception. Another perception is that a priority of Adaire has been to rework and improve sales and support, maybe to address that perception. Mm. Okay. That sales and support maybe didn't match some of the competitors. The real question is, what have you done the last 12 months to change sales and support? Yes To improve that function? Okay. I think that we have been on a journey for a number of years in terms of refining our go-to-market, and making sure that we've got the right teams aligned around the right segments, which was really the focus over probably the last four or five years to ensure that we've got the right team, we've got channel partners who we work in conjunction with, and making sure that we're selling the assets that we want to. There's been a huge effort on not only selling our space and power and interconnection, but also in building out the ecosystem and creating that. That doesn't just happen on its own either. We have a business development team that's focused on making sure that we're bringing the right partners into those ecosystems to serve our customers. Where it's gone now is, as we continue to refine that go-to-market strategy, it's moving into a more, I think, tight verticalization model. We continue the segmentation. The reason segmentation is important is, one, how you serve the customer. A significant customer at the high end of that, what we call a pyramid, they have a higher touch from us. There's greater set of resources around them. They're more complex. They're typically global in nature. You're going to resource them differently. As you go down market, you don't need that level of touchpoints with them, and you're going to have different ways of serving them. That might be service through channel, it might be service through a team that has because the sale is a shorter sales cycle, it moves faster. It's less complex. The refinement that's happening now is to actually take us into a verticalization. We have these ecosystems. We've had a network service provider vertical for many years, same thing with financial services. But to really refine that and say which verticals are driving the most revenue for us, are the biggest impact to our business, that are going to be the biggest users of AI, for example, and AI inference. And to create verticalization, which enables people. I'm going to use financial services as an example. When you've got a team of people, whether that's your frontline salesperson, your technical resource that's doing your design work, your marketing organization, your product team, and they understand the nuances of financial services and what's happening, they're going to be able to better serve you, versus an account team that has financial services, manufacturing, gaming, and public sector, and really doesn't have deep knowledge to be able to become a trusted advisor to that customer. That's the next piece of what's happening from a go-to-market perspective. Also, from a sales perspective or servicing perspective, our servicing model was one that was focused more on responsiveness to the customer, responding when the customer needed us. The service model is changing so that we're providing services based on what customers are asking for. Not every customer needs certain levels of service. Also, there are certain sectors where you might actually charge for some of the additional services that customers are asking for from a support perspective. You're also looking at, there are a team of people that are having a relationship with a customer on an ongoing basis for the life cycle of a contract. There's an incredible amount of opportunity there for them to work with that customer to upsell, to renew contracts, to reduce churn. So really utilizing all of the individuals who touch a customer in a more proactive way with a clear role definition that supports increased customer service, but also revenue acceleration. That was a great answer in a very quick 35 minutes, guys. Stu, Arquelle, thank you so much. Thank you. Thank you all for coming out. Great. Thank you. Appreciate it. Thank you.