EQIX Stock | Equinix, Inc. Q1 2026 Earnings Call

Thank you, Ryan. Hello everyone, and a warm welcome to our Q1 2026 earnings call. This quarter's results reflect continued strength across the business as we capitalize on a large and growing set of opportunities. Demand is broad-based and durable. Execution is driving efficiency and AI continues to fuel infrastructure investments that play to our strengths. Before I get into our results, I'd like to start with some important market context. Over the course of the past year, my conversations with customers have changed. A year ago, they were about piloting AI. Now, our conversations are focused on enterprise-wide adoption at scale. Two forces are driving this shift. Inference has grown from experimental workloads to an engine of real-time business decision making, and agentic AI is moving from demos into distributed deployments with agents acting autonomously to achieve business outcomes. The reality is that most enterprise architectures are not optimized for these workflows. Agents need private low-latency paths to data wherever it lives. They perform best at the edge closest to where the decisions get made, and they must be able to move freely across models and clouds while staying within jurisdictional boundaries. Performance, cost, and compliance all suffer when today's agents run on yesterday's networks. Simply put, this deployment gap is an architecture problem. Enterprises need infrastructure that's purpose-built for the way AI operates: distributed, interconnected, sovereign by design, and in close proximity to the data that matters most. This is a market that we are built to serve. Equinix is not simply the world's largest digital infrastructure company. We are the world's most deliberately curated digital ecosystem, and our Q1 results demonstrate the progress we are making to capture the market opportunity. In Q1, our recurring revenue grew 10% on a normalized and constant currency basis, coming in at the high end of our expectations. This is our second straight quarter of double-digit MRR growth. At the same time, we are driving continuous margin improvement. Q1 was also the largest quarter of total sales activity in our history, inclusive of annualized gross bookings and pre-selling activity. Total sales activity was up more than 35% year-over-year. We drove significant interconnection and cab billing growth while reducing churn, reflecting ecosystem strength across our key operating metrics, and we are expanding our capacity while bringing new products to market that extend our runway for growth. Our progress stems from the extraordinary efforts of our team, and I'm proud of the way our employees are stepping up to meet the moment. Let me now provide some color on our overall results and what's driving our performance. As you saw in our press release, our Q1 results do not include the XScale Hampton lease. We are nearing execution on expanded mutually beneficial terms with our customer. Olivier will provide additional details on how you should model Hampton. Adjusting for the timing of Hampton, our Q1 revenue, AFO, and AFO per share results were all ahead of our expectations. Overall, our XScale pipeline is robust given that our remaining capacity is in major metros. Our momentum reinforces our confidence in the trajectory for the year. As such, we have raised our guidance across several key metrics. I am especially pleased with the strength of the position we are building across the AI inferencing ecosystem. The expansion of our relationship with the world's leading hyperscalers, neoclouds, AI security vendors, and model providers serves as a magnet for agentic AI workloads. Eight of the top 10 AI model providers and four of the top five neoclouds are actively expanding with Equinix. They have placed more than 110 separate network nodes with us to support mission-critical and latency-sensitive elements of their architectures. Consistent with the prior quarter, approximately 60% of our largest deals in Q1 were AI-related. Additionally, large capacity fabric connections have tripled from just a year ago. We believe there is meaningful upside to come given we are still in the early days of the agentic AI wave and inferencing adoption. This momentum is part of a broader uptick in customer demand spanning a wide range of AI, cloud, and networking workloads. Now let me highlight some recent wins and associated use cases. Cupid Pharmaceuticals, a quantum AI-driven drug discovery company, relies on Equinix for the high-performance, low-latency infrastructure required to run millions of GPU-intensive molecular simulations. By deploying a dedicated GPU cluster in Equinix data centers with direct cloud interconnection, Cubit has reduced experimental cycles by 20 times while lowering costs by a factor of five. Most importantly, our solutions are accelerating the path from discovery to potential therapies that can save lives. Gammon Construction, a leading construction and engineering services company in Asia, chose Equinix because of our neutral platform presence across major metros and connectivity solutions to enable their multi-cloud AI platform. They are using our fabric interconnection portfolio to power their network infrastructure, which is the base for innovative solutions such as AI-powered robotics and drones for on-site risk assessments and smarter decision making. During the quarter, we expanded our partnership with Options IT, the number one provider of infrastructure to global financial services firms. They selected Equinix because of our presence in the locations that matter most to their operations and ecosystems, including London, New York, Singapore, and Tokyo. We are enabling Options IT to deliver private cloud and AI-managed infrastructure solutions to grow their business while meeting the data sovereignty requirements of their customers. We also grew our relationship with MK, a global leader in integrated logistics, as it digitizes critical supply chain infrastructure. MK recently selected Equinix as its primary data center partner to support high-performance and AI workloads, including its first liquid-cooled AI deployments in Frankfurt. Our global footprint, secure and resilient operations, and industry-leading interconnection capabilities are supporting MK's ongoing network transformation and long-term growth strategy. I'm exceptionally grateful to all our customers and partners for trusting Equinix to help move their business forward. The outcomes we are enabling for them reflect rigorous execution against our strategic pillars. Starting with Serve Better, we delivered annualized growth bookings of $378 million in Q1, up 9% year-over-year, with approximately $140 million of pre-selling activity. On top of that, as I mentioned earlier, that's 35% growth in total sales activity in the quarter, resulting in a record backlog. Transaction volumes continue to demonstrate a broad base of workload requirements with over 3,800 transactions spanning more than 3,100 unique customers in the quarter. Importantly, we also saw increased customer adoption of our self-service portal. Our portal is a key area of focus as we work to create a better customer experience. It also drives efficiencies within Equinix compared to a traditional quote-based ordering. This is one example of our broader focus on digitizing processes and workflows across the company. Customers placed 20,000 orders through our portal in Q1, up 12% year-over-year, and we intend to continue driving enhancements to this solution. Turning to Solve Smarter, our customers consistently raise two key challenges to us. The first is AI infrastructure fragmentation. Enterprises are spending too much time and budget navigating dozens of disconnected AI model providers, GPU clouds, data platforms, and security services. The Equinix distributed AI hub, which we introduced at NVIDIA GTC, solves this by giving enterprises a single private low-latency connection to the entire AI ecosystem. Unlike AI marketplaces built by providers with their own services to sell, our distributed AI hub is completely neutral, providing access to all models and clouds, so customers can select what's best for them. The second challenge facing customers is network complexity. Most enterprise networks are not designed to handle distributed AI workloads, and it's resulting in degraded AI performance, inflated costs, and compliance risk. Equinix Fabric Intelligence solves these problems by monitoring network performance in real time, automatically adjusting configurations, and flagging anomalies before they become outages, all without human intervention. Unlike other network management tools that sit on top of the network, Fabric Intelligence is built directly into our fabric interconnection platform. This is a structural competitive advantage given the more than 500,000 live interconnections across our ecosystem. Our innovation is extending our market leadership and driving growth. Total interconnection revenue was up 9% year-over-year in Q1, boosted by fabric revenue growth of 26% year-over-year. Fabric bookings were up 70% year-over-year as our attach rate continues to increase. These growth rates are all on a normalized and constant currency basis. On Build Boldly, we continue to expand our capacity to meet demand. We have 46 major projects underway across 32 markets, including six XScale projects. More than 70% of this retail expansion capex is in our major metros, with the remainder focused on critical expansion markets, particularly in our Asia region. Given the strength of our pre-sales motion, approximately 25% of our 2026 retail capacity expansion has already been sold. We continue to meaningfully grow our pipeline for new powered land and capacity expansion opportunities that can enhance our long-term growth prospects in key metros and deliver attractive returns. And we're not just growing, we're doing it responsibly. Last week, we released our annual sustainability report. It shows how we are building essential infrastructure the world needs in ways that are affordable for our communities, sustainable for our planet, and reliable for our customers. These have long been core Equinix values, and they will continue to guide our future investment decisions. In Q1, we announced an important investment in one of the world's most sustainability-focused markets as we signed a joint agreement with Canada Pension Plan Investment Board to purchase atNorth. This deal will further enhance our position in the Nordics by giving us access to an installed and active development pipeline of approximately 800 megawatts expected to come online over the next five years. atNorth's footprint in key markets such as Copenhagen is complementary to our existing AMIA operations and is well positioned to serve enterprise, cloud, and AI growth. The transaction is subject to closing conditions and is expected to be immediately accretive to AFO per share upon closing. Overall, Q1 demonstrated continued momentum across the business, and we see significant opportunities to accelerate growth as we deliver on our strategy. I'm now going to turn the call over to our new CFO, Olivier Leonetti, to go into more detail on our financials. Olivier joined us in March. He has already proven to be an excellent addition to our leadership team. Previously, Olivier was CFO of Eaton and Johnson Controls, two large suppliers to the data center industry. He has a strong track record of delivering profitable growth and creating shareholder value, and we look forward to his contributions to our success as we work to deliver healthy revenue growth, margin expansion, and superior returns. Olivier, over to you.

Thank you, Olivier. Our Q1 results demonstrate strong performance, and our outlook reflects underlying strengths across the business. We see immense opportunity ahead to drive revenue, enhance margins, and deliver attractive AFO per share growth, but we take nothing for granted. Our continued success demands focused execution against our strategic priorities and disciplined investment to unlock structurally higher returns. Above all, it calls on every member of our Equinix team to deliver exceptional value for our customers each and every day. This is the mindset guiding us forward, and I'm confident in our direction. We are well positioned across our markets. We are building momentum in key growth areas, and we remain focused on delivering against the goals we have set. With that, let's open the line for questions.

Okay. Hi Mike. Thanks so much for the question, and maybe let me just clarify a couple of points. I mentioned that it was eight of the 10 AI model providers, the LLMs, and four of the five neoclouds have deployed between them 110 or so separate network nodes to Equinix, and that is in addition to all of the nodes that we see that are being deployed by the hyperscalers in order to manage their connectivity journey. When we look at the role of the neocloud here, we can see that for many of them, their journey is evolving a little. Their value proposition was always based on pricing and based on GPU access and largely facilitating large chain, large term training footprints, mostly focused as with the SaaS and the hyperscaler as we can see. They're transforming into AI inference workloads and looking to pursue enterprise customers and medium-size SaaS companies. We see them as potential inference magnets for our ecosystem going forward, and we see many of them converging as I've mentioned already and engaging at Equinix. It's about a couple of things in terms of the use cases. It's about network nodes that provide connectivity to the CSPs and the NSPs for the neoclouds and the LLMs. It's about AI inference nodes for densely populated metros, so a little bit of a different picture, and it's about fabric access to the enterprise customer base of Equinix. So that sums up the three things that we're seeing for the neocloud use of our environment.

Pricing remains firm whether we're looking at pre-sales or booking within the quarter, and I think the pre-sales booking really provides our customers with security in terms of the infrastructure that they're defining and the opportunity to ensure that they are solving for their own compute and energy future. This is something that I think we've done only in the recent past, but we're seeing great benefit from that in terms of the conversations with our customers and our long-term ability to serve them.

Yes, please.

As it relates to concerns about energy costs, Olivier mentioned our hedging program, which means that we're in a position to be able to continue to support our customers at the price points that we're operating today. I would say based on the demand environment that we see, it is a very durable and broad-based demand environment. It is very diverse, and we're not certainly seeing any pullback from customers as it relates to increasing costs at this point in time. I think you can see that reflected just in the sheer scale of the numbers of transactions and that those transactions occurred across all of our customer segments and also actually equally enough across all industries that were all growing at roughly the same percentage in Q1.

No, we don't see any difference in the capital that will be required. Notwithstanding the fact that our strategy has been to be very metro focused, we are located in 77 metros across the world and we will continue to build on that footprint. But that's already embedded into how we've managed our capital because that's part of our 27-year history, and therefore we don't anticipate any capital differences. I'm going to ask Philip to add an additional comment here.

To comment first on the sequential nature of our annualized gross bookings. First of all, we've concluded Q1, and Q1 is seasonally a quarter that has traditionally been lower. But I have to say that I am especially pleased with the performance that we had in Q1 given that we came off the back of such a large Q4. The team worked really hard to deliver what was our largest Q1 ever and driving our largest backlog ever. So I look forward to moving that into revenue in the future. I'm proud that the delivery of our bookings in Q1 isn't just related to topline, but we did it at margins that are growing and profitability that is growing too. Across the Q1 booking profile, we saw strength, as I mentioned already, across various different industries, but we also saw some very broad-based strength in our under one megawatt deal cohort. As it relates to the second question around interconnection revenue and interconnection revenue growth, we're obviously very pleased by the performance that we've seen here. Our interconnection revenue growth was at 9% on a normalized and constant currency basis. Fabric revenue growth was at 26%, and our fabric bookings grew 74% year-over-year. This kind of growth, the value proposition that we're delivering to customers, is really behind our investment strategy around our distributed hub and our fabric intelligence, which is in preview with a number of customers and partners who are very positive about the outcomes that we're driving with this solution set.

Well, I guess in some way, Jonathan, we're probably seeing that in our stabilized assets where our stabilized assets are growing at 6% and interconnection within that asset group is growing at 9%. I do believe that there is opportunity for us to continue to grow our footprint and the range of services that we are offering to our customers here because we fill a very specific niche in the market in terms of providing that neutral environment where the ecosystem around AI converges. There is potential for upside here, but that is not yet factored into our plans.

Thank you very much for the question. First of all, I think the most important thing for us is the safety of our employees, our customers, and our partners. And that was our most important priority as we navigated recent events in the Middle East. Thankfully, all of our people have remained safe and our facilities are fully operational. We do have a limited footprint across the region. We have a total of six data centers across the Middle East region, and they're comprising about 1% of total revenues. We have one project underway in Dubai at our DX3 facility with a construction project, and we have seen the RFS state of that project be impacted due to the conflict. So limited operational impact. We were able to keep our facilities up and running, but we're watching the situation very carefully. Our long-term view is that the region will continue to see growth and investment in digital infrastructure as the Middle East itself looks to position itself as a global AI hub.

Thanks very much for the question. As you saw at 1.7, we were below the low end of our range, and I think there were probably two elements as to why that was. One was the timing of some churn, including our metal business moving forward into this quarter, and others really is just the continued focus that we've had on the renewal process from our teams. So we're very pleased with the performance that we've seen in Q1. Notwithstanding that, we don't want to call victory too early, and therefore I think to keep our churn in the range of 2% to 2.5% for the rest of the year is the right thing to do. We do believe that our focus on our available to renew contracts, we've been doing that much earlier in the cycle, is actually starting to have an impact, but we will watch those trends closely over the next several quarters. Obviously, our aim is to bring churn down consistently over time, but for now we're holding to the 2% to 2.5% range for the year.

Look, these transactions are always very complex and multifaceted, particularly as we have very high demand assets, locations that are energized within the right time frame in great locations. As we look forward into the second half of next year in terms of Manuka, it is not timing that we have put into the short term. It is something that we are still working on. We have a very robust pipeline of interested parties, and obviously we want to ensure that we're maximizing the outcome for our customers, for our shareholders, for the company. As we look forward into the second half of the year and into 2026, the guide assumes a total NRR of approximately 5.8% to 8% for the full year, and a portion of that is associated with XScale leasing.

Sure. I think the reality of the environment that our customers operate in is the environment that we've been describing on many of these calls, and that is a hybrid multi-cloud environment where data sits across a plethora of all of those platforms, and that creates the opportunity for a neutral platform like Equinix to serve customers who want to run agentic workflows across those environments but need to access the information that sits in more than one location. So I would certainly say that customers have a multi-cloud environment that they are of course looking at the cost associated with their environments as well as important considerations, particularly in locations like Europe around sovereignty and the compliance to the sovereignty legislation, which may mean that certain parts of their data set need to move into a private environment or be repatriated from cloud. But I wouldn't say that this is a broad-based conversation that we have across our customer base. I think as we talk to CIOs, it's a conversation that is less about on-prem and cloud and more about the journey from token management, token cost, all the way through to those kind of sovereign data controls that ensure that the organization is compliant to whatever set of data governance rules that they have in place for their own business. That's certainly a conversation that's an important one because we can help customers navigate that by providing through the distributed AI hub access to all of the players as well as to private SLM models which companies have for smaller, less intense AI type activity. So I think the conversation is really about how you navigate from the token and the training all the way through to that compliance conversation, often driven by sovereignty in some locations.

Okay. Thank you for the questions. Maybe we'll take that between us given that there's portions for each of us in here. First of all, as I think we mentioned in our materials, we have 3 gigawatts currently either in land under control or in development today at Equinix. So that's the broad base of the portfolio that we are working with. But as Olivier mentioned in his prepared remarks, we are at the top end of the range that we mentioned for capex earlier at Analyst Day last year. We are continuing to meaningfully grow our pipeline for new powered land and capacity expansion opportunities to enhance what we see as the long-term growth prospects in key metros, which of course we know delivers very attractive returns. So we're very pleased and excited about what we see in the business. We're very excited to position ourselves for growth. But you can see that we are at the top end of our range as it relates to capex from the Analyst Day event when we provided that guide last year. But perhaps I'll flick to Olivier and allow you to comment a little on the returns and so on.

Thank you so much for the question. We had quite a significant quarter in Q1 as it relates to liquid cooling orders generally, of which MK was one. I believe it was a 50% growth in terms of our liquid cooling deployments, and today we have 36 deployments across our footprint of customers using liquid cooling to facilitate the workload and density of the systems that they have put in place. It's active across all our regions, and it's something that we continue to evaluate and work closely on with our customers. So that's the landscape that we see as far as liquid cooling is concerned. At said 36 deployments, seven orders within Q1 across all of our regions, up 50%.

I think probably the availability of power would be the largest constraint in our environment. So as densification increases, quite often we would need to put some space on hold around that particular implementation in order to ensure that at that IBX we're meeting not only the obligations of the workload that is a highly dense workload but also the service level agreements and the obligations that we have with the other customers who are sharing that space and power. That's I think one of the reasons why you see the yield on our MRR per cab grow so effectively, up to our $2,524, up 7% year-over-year, partly due to the increase in densification and of course the association of value-added products like interconnect with every installation as one of the measures.

We just want to thank you all for joining us for our Q1 call. Have a great rest of your day.