Equinix outlines plans to double capacity by 2029 as Q3 bookings surge 25% year-over-year

Earnings Call Insights: Equinix (EQIX) Q3 2025

MANAGEMENT VIEW

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Adaire Fox-Martin, CEO, reported that "Equinix delivered a very strong third quarter, a performance that continues to demonstrate our ability to rapidly invest in significant expansion whilst growing our top line and improving profitability." She highlighted three key areas: top line growth with MRR up 8% year-over-year and record annualized gross bookings of $394 million, strong profitability with AFFO up 12%, and meaningful expansion through substantial land acquisitions in Amsterdam, Chicago, Johannesburg, London, and Toronto supporting over 900 megawatts of capacity.

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Fox-Martin shared that Equinix closed over 4,400 deals with more than 3,400 customers in Q3, attributing momentum to demand for both AI and non-AI workloads, and showcased customer wins such as Hyundai Motor Group, Zetaris, ING, and Nitori.

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The CEO outlined the company's three strategic moves: Serve Better (customer value and presold bookings of $185 million), Solve Smarter (interconnection growth of 8% to $422 million, 7,100 net connection adds, and new cloud on-ramps), and Build Bolder (aim to double capacity by 2029 with developable capacity now at approximately 3 gigawatts).

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Keith Taylor, CFO, stated, "Nearly every key metric was at or better than expected. Our sales teams delivered record annualized gross bookings across our diversified customer base, resulting in very healthy net bookings in Q3." He emphasized that over 40% of the presales balance was signed in Q3 and that the company remains focused on capital allocation and executing the Build Bolder initiative.

OUTLOOK

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Equinix is maintaining its underlying revenue outlook for the full year with a 7% to 8% normalized and constant currency growth rate. Taylor stated, "Our expected quarter-over-quarter MRR step-up is greater than $60 million, a significant year-over-year increase, highlighting the underlying momentum in the business and gives us the confidence as we look into 2026."

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Adjusted EBITDA guidance for 2025 is raised by $21 million, with margins expected between 49% and 50% for the year. AFFO guidance is also raised by $31 million, with growth expected between 11% and 13%, and AFFO per share growth projected in the range of 8% to 10%. CapEx for 2025 is now expected to range between $3.8 billion and $4.3 billion.

FINANCIAL RESULTS

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Global Q3 revenues were reported at $2.32 billion, up 5% over the same quarter last year. Recurring revenue growth was up 8%, with nonrecurring revenues moderating due to lower xScale fees.

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Q3 adjusted EBITDA reached $1.15 billion, up 8% year-over-year, while AFFO was $965 million, up 12%. MRR churn stepped down to 2.3%. The balance sheet included $2.9 billion in cash and short-term investments, and net leverage was 3.6x annualized adjusted EBITDA.

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Eight major projects were opened, including new data centers in Chennai, India, and Monterrey, Mexico.

Q&A

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Nicholas Del Deo, MoffettNathanson LLC, asked about the strategic importance of new cloud on-ramps and AI deployments. Fox-Martin responded that Equinix maintains "a market-leading position in native cloud on-ramps" and is actively attracting AI magnets such as Groq and Nebius, noting that "many of these Neoclouds are using Equinix as a point of connectivity and a point of presence."

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Aryeh Klein, BMO Capital Markets, questioned the impact of extended sales timelines on presale activity. Fox-Martin explained that extending the window for sales to 12 months has increased presales, and Taylor added the push is a response to "a demand-rich environment and also us chasing the ability to deliver capacity into the market as fast as we can."

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Eric Luebchow, Wells Fargo, asked about pricing trends and AFFO growth. Fox-Martin confirmed "very firm" pricing and highlighted focus on revenue, RFS acceleration, and cost efficiency for 2026, while Taylor noted lower borrowing costs and effective capital management.

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Jonathan Petersen, Jefferies, inquired about recent land acquisitions. Fox-Martin said London and Chicago are earmarked for xScale, and the split between retail and xScale is "somewhat fungible."

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Michael Elias, TD Cowen, asked about the Chicago site and xScale customer mix. Fox-Martin stated Equinix is considering co-location of xScale and retail, and would consider large enterprise customers for xScale if appropriate.

SENTIMENT ANALYSIS

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Analyst tone was constructive and focused on granular operational details, with questions drilling into presale dynamics, pricing, land use, and xScale execution. The sentiment was neutral to slightly positive, seeking clarity on execution rather than expressing concern.

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Management maintained a confident tone, frequently referencing strong demand, operational flexibility, and the robustness of the pipeline. Fox-Martin said, "We are focused on executing against our Q4 expectations and building our momentum for 2026, and we are very much on track on both accounts."

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Compared to the previous quarter, management showed increased confidence, particularly around presales, land acquisition, and strategic pipeline acceleration, while analysts’ tone remained consistent, focusing on execution and capital allocation.

QUARTER-OVER-QUARTER COMPARISON

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Annualized gross bookings rose from $345 million in Q2 to $394 million in Q3, a 25% year-over-year and 14% sequential increase.

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Developable capacity increased by nearly 50% quarter-over-quarter to 3 gigawatts, reflecting accelerated land acquisition.

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AFFO growth guidance improved from 10%-12% in Q2 to 11%-13% in Q3, and AFFO per share growth guidance modestly increased as well.

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Management’s tone shifted from highlighting the foundation of growth at Analyst Day and Q2 to emphasizing accelerated execution and capacity expansion in Q3.

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Analyst focus in both quarters remained on bookings, capital deployment, and xScale, with Q3 seeing more questions on presales and land strategy.

RISKS AND CONCERNS

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Management acknowledged the fluidity and potential volatility of bookings, stating "bookings can be inherently volatile."

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The timing of large xScale transactions remains uncertain, with Taylor highlighting the expanded Q4 revenue range to account for this.

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Power availability is a key industry concern, but Fox-Martin stressed that "all of our current 12 projects, all have power secured."

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Competitive dynamics in emerging markets and execution on accelerated build schedules present ongoing operational risks.

FINAL TAKEAWAY

Equinix management emphasized that strong Q3 financial and operational performance, record bookings, expanded presale activity, and a robust pipeline underpin confidence in the company’s strategy to double capacity by 2029. The leadership team reiterated focus on executing against ambitious growth targets, maintaining firm pricing, and effectively managing capital allocation to support durable long-term value creation for shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/eqix/earnings/transcripts]

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