Equinix Posts 87th Straight Quarter of Revenue Growth

Equinix extended its streak of steady revenue growth in the third quarter of this year after another record-breaking level of quarterly gross bookings for its global stable of data centers. 

The Redwood, Calif.-based real estate investment trust reported $2.2 billion in revenue in the trailing three months, a 2 percent increase quarter-over-quarter and a 7 percent rise over the same period last year. It is also the company’s 87th consecutive quarter of revenue growth. The vast majority of that revenue was recurring, driven by Equinix’s colocation and interconnection services across its 260 data center facilities around the globe, which hit about $1.5 billion and $384 million, respectively. 

Equinix’s earnings meanwhile hit $1.05 billion this quarter, an increase of 1 percent over the previous quarter and just the second time that it exceeded $1 billion. As a result of the quarterly performance, Keith Taylor, chief financial officer, said that the firm was raising its revenue guidance by $36 million and adjusted earnings guidance by $10 million for the full year.

The REIT notably announced a joint venture with Singapore-based sovereign wealth fund GIC and the Canada Pension Plan Investment Board in early October to raise over $15 billion toward development of hyperscale data centers, which Equinix calls “xScale.” The REIT said in early October that it plans to use the fund to triple its investment in such facilities, of which it operates 36 across Europe, Asia and the Americas. 

Although the REIT’s current xScale capacity of 385 megawatts is a relatively small part of its revenue stream, President and CEO Adaire Fox-Martin said during the earnings call that the firm is investing in xScale because of the opportunity associated with larger facilities, especially as users embrace AI.

“Please see this as an ‘and,’ not an ‘or,’” Fox-Martin said in response to a question during the call regarding the REIT’s investment in xScale. “We want to very clearly articulate that, for us, this is about being balanced in our approach to the opportunity, and that whilst training workloads have dominated the total kilowatts leased at this particular moment in time, we see significant opportunity as customers move through the stages of AI adoption at a much more accelerated pace than they move through the stages of cloud adoption.”

Fox-Martin noted an effort to build “fewer and larger campuses.” Still, Equinix currently has 57 projects in the pipeline in 22 countries, including 13 xScale projects. More than 100 megawatts of xScale capacity is expected to be delivered by the end of 2025. About 90 percent of its currently operating and under-construction xScale capacity is already leased.

The firm is also in the midst of developing its first multiple-hundred-megawatt capacity xScale campus in Atlanta, which it announced over the summer. Equinix purchased about 200 acres in the Atlanta metropolitan area for the campus, which Fox-Martin is expected to contribute to the new JV. 

The REIT’s cash on-hand, together with short-term investments, was about $3.2 billion as of the end of September. Taylor said that about $1 billion of that would be used to pay down debt in November. He also said the firm was already planning to raise its next package of debt capital.

“We can put more leverage on the books with great comfort without finding ourselves in harm’s way with any of the rating agencies, and so we have a lot of strategic flexibility there,” Taylor said. “We’re in a very enviable position vis-a-vis the liquidity and strategic flexibility we have, and the partners we’re engaging with to scale the business in the xScale franchise.”

Nick Trombola can be reached at ntrombola@commercialobserver.com.