Good afternoon and welcome to the Digital Realty First Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, we would like to limit the questions to one and one follow-up. This event is being recorded. I would now like to turn the conference over to John Stewart, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Denise. The speakers on today's call will be CEO, Bill Stein; and CFO, Andy Power; Chief Investment Officer, Scott Peterson; Chief Operating Officer, Jarrett Appleby; and SVP of Sales and Marketing, Dan Papes are also on the call and will be available for Q&A. Management may make forward-looking statements related to future results, including guidance and the underlying assumptions. Forward-looking statements are based on current expectations, that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of the risks related to our business, see our 2016 10-K (01:17). This call will contain non-GAAP financial information. Reconciliations to net income are included in the supplemental package furnished to the SEC and available on our website. And now, I'd like to turn the call over to Bill Stein.

Thanks, John. Good afternoon and thank you all for joining us. I'd like to begin today with a discussion about governance. As you may recall, we announced last year that our Board of Directors expects to appoint Laurence Chapman as Chairman of the Board at our upcoming annual meeting in keeping with our commitment to sound corporate governance practices and longer-term succession planning. Laurence will take over as Chairman from Dennis Singleton, who is standing for re-election and is expected to continue serving on the board after he steps down as Chairman. Earlier this afternoon, we announced that Mary Hogan Preusse will be joining our board as well. Many of you may know Mary. She has spent the past 17 years at APG Asset Management, where she has served as a portfolio manager, most recently with responsibility for managing all of the firm's public real estate investments in North and South America, totaling over $13 billion in assets. APG is a leading advocate for shareholder-friendly corporate governance structures and responsible real estate investing. APG has also been one of our top ten actively managed shareholders for the past 12 years. So Mary is intimately familiar with our business, given her portfolio management responsibilities. We are delighted to bring Mary's institutional shareholder perspective to the boardroom and we look forward to welcoming her to our board. You may also recall that last year, we announced the appointment of Mark Patterson and Afshin Mohebbi to our board as well. Mark brings deep real estate expertise to the board, whereas Afshin's extensive experience in the technology and telecom sectors adds a highly complementary skill set. The governance principle behind these changes is balancing fresh thinking and new perspectives with experience and continuity. Following Mary's appointment, 6 of our 10 directors who have joined…

Thank you, Bill. Let's begin with the leasing activity here on page 7. Our total bookings for the first quarter were a little over $50 million, including a $9 million contribution from interconnection. We signed new leases for space and power totaling $42 million during the first quarter, including an $11 million colocation contribution. The first quarter activity played to our strengths. We transacted in 21 of our 33 global markets during the first quarter and roughly 20% of first quarter customers transacted with us in multiple markets. Approximately two-thirds of our activity was concentrated in North America, with the balance evenly split between Europe and Asia. The quarter did not hinge on any one transaction. The largest single deal was just 3.2 megawatts and colocation and interconnection accounted for nearly 40% of our total bookings. We added 28 new logos during the first quarter and we signed over 200 leases for space and power. Including interconnection, we completed more than 900 transactions. First quarter wins included numerous signings from top cloud service providers, specialized cloud verticals and other vibrant customers driving the digital economy. Our wins included new customer deployments in new markets as well as continued expansion of existing customer infrastructure within our portfolio. These signings were both big and small and landed within our footprint of urban infill Internet gateways as well as larger scale campus locations across four continents. On the enterprise front, our wins included strong customer demand from both IT service providers, as well as numerous enterprise customers that came directly to Digital, including a large U.S. healthcare company, a multinational semiconductor and software firm and a global investment management firm. In terms of integration, we're off to a strong start in 2017. As mentioned on our last earnings call, we combined our European…

I would be happy to. At this time we will begin the question-and-answer session The first question will come from Jonathan Atkin of RBC Capital Markets. Please go ahead.

Thanks. So I've got a question about the sales force. And if you could talk a little bit more about the kind of the realignment efforts. Where do things stand now in terms of (23:16) and then how did the sales roles change in light of the products alignments that Andy was talking about?

Andy, do you want to cover that?

Jonathan, thanks for that question. We restructured our sales team in early in the first quarter, as Bill mentioned in his beginning comments. And what we did there was we decided to organize our sales team to sell to our customers in a way they buy, cloud service providers buy differently than enterprises and differently than network solution providers. What we've done is trained our sales team around these solutions. We've also hired skilled resources onto the team in order to make sure that we're providing expertise and solutions to our customers' opportunities and problems. And we're deepening those skills throughout the year. We saw some positive impact from that in the first quarter, as you can see from the strong sales numbers that we turned in. But we also expect that as our skills deepen and our relationships deepen and the strategy itself takes hold that we'll see continued progress as a result. It's not an overnight dramatic doubling of sales kind of an impact. But it, over time, will be the right strategic move. And again, we saw impact from that in the first quarter that we thought was very positive. I think it's important to note that we did do the restructuring at the beginning of the first quarter. It was a major restructuring and integration of the Telx, Digital and Telecity assets. And yet still turned in a strong quarter, which we feel very good about.

Okay. Do you have a, kind of, a targeted portion of bookings that you would look to be generated by channel partners over time as well as a mix between wholesale versus retail?

We do. So, first of all, the mix that we had in the first quarter, Jonathan, we were very comfortable with. Other than the fact that we want to grow our channel opportunities significantly over time, this balance of about 60% of scale business and 40% of colo business is one that we're comfortable with and we'd like to maintain over time. As it relates to channels and alliances, Bill mentioned in his opening comments as well that we did low single digits of the business that we did – booked in the first quarter through our channel partners. That is something that we're very focused on changing. I'm not going to give you a, necessarily, a percentage target of our sales right now that we'd like to generate through the channel, except to tell you that we'd like it to be meaningfully higher than that and I think it's probably safe to say that at some point in 2018, to make it double-digit portion of our bookings, the percentage of our bookings in 2018. We think that we can get there. Change of focus on channels and partners and alliances is a meaningful endeavor and takes new processes and methodologies for working with partners. The leader that we've hired from a top IT managed services provider, who has extensive channel experience, has that reengineering of our channel organization underway. And, I think, starting in the fourth quarter and certainly in 2018, you'll start seeing impacts that really matter in those areas, which will be positive.

The next question will come from Jordan Sadler of KeyBanc Capital Markets. Please go ahead.

Thank you. I wanted to come back to the overall leasing volume in the quarter and then maybe the composition of it. I think Andy, in your commentary, you identified the largest deal as 3.2 megs. I'm curious, one, what the demand funnel looks like, maybe for Dan, if you could talk about it in the context of how it's built over the quarter and where we really stand? And then just within that funnel, what you're seeing, if anything, from the CSPs?

Jordan, this is Andy, maybe I'll speak to give you a little more color on the quarter, then let's see what you can get out of Dan on our pipeline. So if you look at the total amount of signings for the quarter, the – we had a similar concentration in kind of that SMACC vertical, which is cloud and other parts of the digital economy, which is about 65% of the total volume. What was a little bit different this quarter is that about – of that component, it was more heavily weighted to other parts of the digital economy relative to just the top cloud service providers. We still had a significant portion, I think, a third of that chunk I just described was top cloud service providers but there's a lot – there's a whole bunch of other parts of specialty clouds, other parts of companies that are part of the digital economy and have their businesses over the Internet, were a driver. And then rounded out, the other 35% of the total demand, was a combination of IT service providers and a host of other customers, which I'd probably characterized as enterprise. So, we really attacked enterprise customers two ways with our – a great group of IT service providers and also enterprise that come to us directly. That mix has been fairly consistent. But it did pick up a little bit at the end of the last year and into the first quarter. And I'll turn it over to Dan, if he wants to touch on pipeline.

Sure, yes. Jordan, thanks for the question. Our pipeline for the second and third quarters, which I tend to look at it over multiple quarters at this time, looks to have a similar mix to what Andy described that we saw in the first quarter and then what we've seen in the past. I will say that the demand in all areas, in interconnection, in colocation and in our scale business, looks to us to be very solid. And it's our job to go out and capture that business but we're pleased to have the opportunities out in front of us to go after and try to capture. So the demand funnel looks good and again, will drive those results that you'll see in the coming quarters.

And then just a follow-up on the FFO flow through the year, Andy. Any insight you could offer in terms of the contribution of the $68 million of backlog that's starting in 2017? And maybe an explanation as to how much the G&A is going to fluctuate?

Sure. So, we intentionally wanted to make sure we didn't have any surprises here because we do have a little bit of a funky quarterly distribution of our core FFO per share this year. So we did have a little bit of a pull forward of some good news on the revenue and NOI front during the quarter. We had a positive outcome on a property tax accrual. So, we do see a quarter-to-quarter step down, due to some of those good newses not repeating themselves. And the G&A is going to pick up, based on timing of when we did our promotions, merit increases and stock grants. And then we do have a decent portion of our backlog that comes in back half of the year. I think, I'm not sure if that's included in our prepared remarks, we signed our – a lease for the second phase of Osaka, which is – that property is essentially now fully leased and we've also purchased a land parcel for expansion of that campus. Both the first customer and the second customer that will be landing in Osaka are late back half of 2017 revenue event. So they'll be coming on in the fourth quarter and providing some growth going into 2018.

And the next question will come from Michael Rollins of Citi. Please go ahead.

Hi, thanks for taking the questions. Two if I could. The first is, I'm looking at slide seven and I'm looking at slide 18. And I'm wondering, to what extent you have the opportunity for this $50 million in bookings to become more of a run rate for the company and kind of help that curve on – the bars on chart 18, given you have a bigger presence in Europe now, you're growing in Asia, as you mentioned, you've got interconnection as a more pressing focus. So I was wondering if you could talk a little bit about how to think about where the new run rate for this business should be? And if you're able to get there, does that change the way FFO and AFFO can grow on a go-forward basis? Thanks.

Sure. Maybe I'll just highlight some of the components that got us to north of $50 million signings this quarter, which I do think lend itself to additional strong quarters in 2017. Although I – we can't promise and I can't promise north of $50 million every quarter of 2017. I mean, you're 100% right. One way to generate incremental revenue is to do that in incremental footprint. And I think you saw that in a few pockets of our portfolio in the first quarter. I already talked about our wins in Osaka. If you hop over to Europe for a second, I can tell you that we had a fairly large signing within a new customer to Digital in Dublin. We had a similar – existing digital customer that anchor our scale campus deployment in Amsterdam. We also had some wins on the colocation front. So we had expansion in both U.S. and Europe in terms of colocation signing wins. And I can tell you, Frankfurt is coming online, from a campus perspective, at the back half of 2017. We haven't signed any major leases there to date, but we have had smaller wins in Frankfurt, including a digital – long time digital relationship, a colocation customer that was seeking colocation footprint. We are able to place them into one of those eight assets we acquired last summer with a 250-kilowatt or 240-kilowatt colocation footprint. But they came to us, not just because of that, seeking that deployment, but also our relationship and the fact that they could see the growth into our campus down the road in the future. So lots of positive momentum. New places to sell that could lend itself to continued steady-eddy growth in our signings. And that's obviously what we're seeking. And I don't know if anyone else wants to chime in here on that front.

Yeah. Thanks, Michael, it's Dan Papes. So, just to add to Andy's comments. I talked about the balance that we had in the quarter, the contributions from interconnection, colocation and scale. And Andy had mentioned that our – the deal sizes in the scale side of the business were in this 2-megawatt to 5-megawatt range. We do think that that combination, that healthy balance of sales across our portfolio should provide us, over time, the ability to provide sort of less lumpy kinds of quarters. But it's the nature of this business, given the fact that some of those larger transactions happen, the 5 mega – when you get towards the 5-megawatt transactions, there'll still be some up and down over quarters. But I think over time, you'll be able to draw the line in the bar chart that shows a consistent upward trend. And again, I think the balance that we have across the portfolio really helps us a lot in regards to that.

And if you're able to achieve that level, would that be a catalyst for upside in your outlook for FFO and the opportunity for AFFO? Or is this a type of activity that's now priced into your guidance for 2017?

If you're able to kind of exceed our internal lease expectations and kind of hit the right-hand side of that guidance table on, call it, page 5 or 6 of our financial supplement, I mean, we see tremendous flow through and you see that by the fact of our operating margins at the property level or EBITDA level. So those will certainly be indicators that pushes through the higher end, if not, above the higher end of the guidance. But again, it's only – we got three quarter – three months, one quarter done, so we got a long way to go still.

Mike, one thing I'd like to add is, to the extent we are doing this business outside the U.S. and because we match fund, the interest costs are lower outside the U.S. than they are in the U.S. right now. So there's an incremental effect there.

And the next question will come from Paul Morgan of Canaccord. Please go ahead.

Hi. Good afternoon. Just in terms of the – I don't know if this is provided somewhere, I missed it in the sup or something. But in terms of the kind of the quarterly pace of FFO that you mentioned in one of the slides in the presentation, I assume that chart is just kind of illustrative, because it looks like a much bigger impact versus kind of the 51%-49% breakout between kind of what you provided. But do you have any numbers on kind of the G&A impact and the property taxes, just to kind of quantify their impact on the quarters?

Paul, we try to stick with the precedents, and the precedent here has been to give annual guidance and not provide the quarterly granularity. And we certainly help to work with modeling questions off-line, if anyone would like to discuss. We just – given that a little bit of a pickup in G&A, pick up in G&A was like roughly around 6% of our revenue. So, obviously trending towards the low-end of our guidance range. That's going to be a little bit of a haircut. And we also have some capital stack items, which have been not there. The last leg of our forward equity offering will close out in that 2.4 million shares to our share count. So those items, in particular, are obviously going to create a little bit of a step down from the first quarter to the second quarter for core FFO per share. But we see that being offset with additional revenue from our properties in the back half of the year.

Okay. And I could follow up on a couple of line items, I guess. And just my other question on Service Exchange, you've had, I guess, five or six months now that you've kind of been operational in the eight markets and you're about to kind of double that, I guess. Are there any takeaways from your experience so far? And kind of how you're seeing that as a driver of kind of the interconnection and colo sides of the business? And in terms of maybe what kind of customer segmentation is seeing the most take-up? And how material a driver could be over the next year or so?

Thanks, Paul, this is Jarrett. It's still early days, we actually launched in December. And we really – we're pleased and on track and slightly ahead of plan. It is changing the dialogue we're having with our customers, especially around the broader interconnection value. We can now do that all through our portal. Day one, our customers get private access to the top three cloud service providers from all our sites, so that's Microsoft, Google, AWS and now, Oracle. And I'll give you just three quick examples, we – just this quarter; we did – a global managed service provider is now offering high-bandwidth secure access for multi-cloud to support hybrid cloud for enterprise. So they're winning enterprise deals. And as part of the deal in Frankfurt, they actually required us to have a Service Exchange launch there. There's a global system integrator who is using Service Exchange now to allow self-service for their customers on our interconnection platform in Virginia and multiple sites. And then there's a disruptive new kind of hyper-converged player who is actually using the Service Exchange to provision in an automated fashion, using our Service Exchange platform in – on the West Coast. And so we're seeing different use cases. We're communicating that through the sales team and channel. But again, this is really our first full quarter of launching that product.

The next question will come from Lukas Hartwich of Green Street Advisors. Please go ahead.

Thanks. Hey, guys. One of your peers this morning talked about an improvement in the New York market. Is that something you're seeing as well?

Yeah, I think there was some commentary around New Jersey in particular. I'd say the New York market for us is a little bit bifurcated. We still have fairly dominant positions with their Internet gateways into the city, which is obviously focused on performance-sensitive colocation and interconnection points. We continue to see strong demand, be it 111 8th, 60 Hudson, 32 Avenue of Americas. Out in New Jersey, we're not – we don't have a ton of available space. We've not been a active developer really in that market given the retrenching of the demand for a while. We did do a handful leasing, but I think you'll see our 2 Peekay Building in New Jersey, that's – occupancy has picked up in the last quarter. But I wouldn't – relative to other things or wins we had during the quarter, I wouldn't say that was a standout market for us.

That's helpful. And then looking at the presentation, it looks like the slide focused on Telx is gone. Can you comment at all about the things that were used to be on that slide in terms of how the business is trending relative to your expectations?

Sure. So we sunsetted that slide with kind of the year one completion of our underwriting and meeting and exceeding them on all of our financial objectives. Broadly speaking, integration from the Telx transaction is really down to a limited amount of items. The teams fully are integrated. That unification of the sales and marketing team under Dan's leadership was the final piece of that. We do have to sunset the Telx accounting system, which we'll complete later this year. But from a people, process and systems standpoint, we're almost really close to the finish line, if not there. In terms of financials, that's really been a part of our success in, on – in the North America colocation and interconnection business. You've seen that's had a – we've had a tick up in our signings volume, you've seen a tick-up in our interconnection revenue line item, be it quarter-over-quarter or year-over-year. We've grown the North America colocation footprint. I believe the total colo footprint is now about a 17% expansion relative to prior to when we bought the Telx business. So we've grown them in Ashburn, and had some wins with new customer there. We've grown them in the Richardson Campus. We've expanded their footprint in 350 East (44:58) Cermak and we're also seeing some strong demand in our 600 West 7th asset in LA. So off to a start, (45:08) pretty much through the chute on integration and continue to track along and be a key contributor of our business despite the slide not being in the deck anymore.

And the next question will come from Robert Gutman of Guggenheim Securities. Please go ahead.

Hi. Thanks for taking the question. You saw a nice step-up in colocation in North America compared to the prior quarters. I was wondering if you could provide a little more color on what's behind that. Is it more a function of internal changes at Digital? Is it related to sales restructuring at all? Or is it timing? Or is it a change in demand in the market?

Hey Rob, this is Andy again and congratulations on your new post.

Thank you.

Well-deserved.

Thanks.

So you were asking colocation signings volumes quarter-over-quarter or year-over-year?

Yeah, the $9.5 million number versus the prior quarters, which were all – probably a string of quarters, which were more like in 6s?

Yeah. It's a piece of the colo numbers, obviously, Europe, the addition of the eight assets in Europe. But you can see in our table, the signing numbers are broken out. So they're – and you still do see a step-up in North America volumes. I think our colo interconnection signings were our highest signings numbers since we acquired the Telx business, a little – about two years ago almost. And I think in the history of Telx, it's a top two, yes, top two performance. I think we saw, not only continuation of traditional customers growing their footprint or connectivity packages but we saw a lot of new wins, be it new customers to the colocation footprint or an existing customer going to a new market, both of which not only spur – that case type not only spurs demand for space and power but incremental connectivity. So I think those are some of the elements that kind of drove the results. I'm not – I think coming together as one unified team under Dan's leadership certainly played a part in it. But I think having more time with the full multi-product offering across the globe certainly helps us as well.

Great, sounds good. Thank you.

And the next question will be from Vincent Chao of Deutsche Bank. Please go ahead.

Hey, everyone. Just a question going back to the bookings volumes and the potential for that to go up over time. So you've got the sales force realigned at this point, you've got a channel partner program that hopefully will ramp up as well and market demand seems to be quite strong, 2x current supply. I was just wondering, to what degree your own supply is a potential constraint. And maybe part of that is, page 38 of the sup, you have all your inventory. I'm curious, how much of that inventory is entitled or is ready to start depending on demand and that kind of thing?

Hey, Vin. I would say, we've done a pretty darn good job at, what I'll call, supply chain management, and a lot of that we owe to Scott and his team's success of procuring the long lead time items, be it land, at our many campuses, locations and whether it's in Ashburn, Virginia or in Franklin Park in Chicago or in Richardson in Dallas. We either own or control a significant amount of acreage typically adjacent to our existing campus that really lends itself to our value proposition of having these customers being able to come to our campus and we can show that they can land and expand and not outgrow our footprint. So we do not see any scenarios where we're really sold out, especially in our kind of core active development markets such as the core four in North America, our Ashburn (49:18) Silicon Valley. Silicon Valley, which is probably one of the tightest markets, we're bringing on incremental space at the end of this year in terms of new capacity. And we see a similar scenario in London, Dublin, Amsterdam, Frankfurt and Singapore. Osaka, Japan, now that we had success there, we do have the land, it will take us a little bit longer. So we won't be bringing on incremental capacity in 2017 or early 2018 for that property, but shortly thereafter, with that recent acquisition. So I think we're in pretty good shape in terms of being able to meet near-term and long-term demand.

Okay. And then turning the question back to an earlier part of the conversation around the cloud service providers. I mean, last year or 2016 was sort of the year of the CSP. This year, volumes for the first quarter so far seem pretty good across the board. But you may be on the smaller size deals side of things. Just curious how the conversations are this year versus last with the bigger hyperscale guys.

Yeah, Vincent, this is Dan Papes. The conversations, I think continue to be around growth. The cloud service provider demand, to us, looks – continues to look strong. As kind of as far as the eye can see, I don't see it diminishing. We do see an interesting mix of deals that are in this 2-megawatt to 5-megawatt range that we brought down in the first quarter and some larger transactions. I see it, I see the trend continuing the way it's done in the past. And it's one of the things that we feel good about as we look forward at the opportunity before us. Andy, I don't know if you'd add anything to that. But...

Same page here.

Yes.

And the next question will be from Matthew Heinz of Stifel. Please go ahead. Matthew Heinz - Stifel, Nicolaus & Co., Inc.: Hi, thanks and good afternoon. I was hoping you could spend a little bit of time talking about the overall health of the U.S. market, looking forward maybe 6 to 12 months. We've seen yields across some of the peer group dip a little bit. And I can appreciate that you're not necessarily pursuing the same type of customer funnel but how do overall supply levels look relative to what you would consider a stable run rate of demand? And then just maybe as an add-on to that, how would you compare the health of the U.S. market relative to Europe at the moment? And I guess, all else being equal, where would you prefer to invest your next dollar of capital right now?

Sure, Matt. I'll start and I'll let the other guys chime in here. So broadly speaking, I mean, I'll speak to more scale orientation, that's the bigger volumes side in terms of size of deals. The Ashburn continues to be a very robust and diverse customer backdrop. We continue to see numerous signings, fairly sizable signings. Obviously, Ashburn, there is also a competitive set. So we are competing with deals. We think we're winning our fair share, or if not more. And we still see demand being very large and growing and eclipsing that supply in that market. After Ashburn, you kind of go to Dallas and Chicago in terms of overall size of markets. Similar number – similar dynamics, I'd say to an Ashburn but probably just a little bit smaller in terms of markets, smaller in terms of number of customers, smaller in terms of some of the size of the deals in some scenarios. And if you head west to Silicon Valley, that's probably our tightest market by far, a much more limited supply. I can tell you that based on the demand outpacing supply in that market, we've seen an uptick in face rates of deals signed, we signed, I'd call it, two deals kind of 0.5 megawatt each. So kind of small scale or large colo deals at, call it 150-ish or north rates per kilowatt in this past quarter. And I know those rates going back several quarters or a year or could've been in the 130s-ish kind of area. So you've seen a little bit of pick up and that's the one market where large deals seem to be picking up based on supply and demand dynamics. Europe, as a whole, it's – we have a smaller presence there relative to our U.S.…

Yeah. Scott here, Matt. Look, I wish we had the luxury of being able to pick and choose where the next dollar went. The reality of it is it's still a lumpy business. And so you kind of have to go where the demand is and where you can do signings and generate revenues on all that. I would say for the yields dipping a little bit, I think part of that can be explained with there's more liquidity in the industry and more aggressive capital. And some competitors out there are willing to be a little more aggressive as it relates to yields. So I don't find that entirely shocking. And that will fluctuate depending on how supply and demand balances out in those markets over time. But the fact that you're seeing that now, it shouldn't be too shocking of that. But beyond that, I think Andy was spot on, on the differences between the three regions.

Yeah. Hey, Matt. One thing I want to emphasize, though, is, I think it's important to have space in all of these markets to satisfy our customer's requirements. Our top 20 customers, of those, 95% of them are in multiple regions. And another 70% of the top 20 are in Europe and the U.S. And then frankly 25% of them are in Europe and in Asia. So, yeah, it's just important that you have space, we think, where we have it to meet their demands as they arise. Matthew Heinz - Stifel, Nicolaus & Co., Inc.: Okay. Thanks. I really appreciate all the color there, guys.

Sure.

And the next question will come from Colby Synesael with Cowen. Please go ahead. Colby Synesael - Cowen & Co. LLC: Great. Thank you. I wanted to, I guess, follow up on one specific market, which is Dallas. We're getting questions specific to RagingWire and the large facility that they just opened up there. And I'm just curious if you think if that by itself could negatively pressure that market, perhaps, for the remainder of 2017 and what you're seeing there. And then secondly, on the bookings, there's been a lot of focus on this. Clearly, it's a good quarter, I think, by your standards as well as, I think, how it's being perceived by investors. But I guess with the book-to-bill being just three months, I'm surprised that that's not leading to some acceleration in growth. And maybe that's just a reflection that you guys have a pretty large range in your revenue today, it's about $100 million, or maybe it's the churn that you kind of called out that you're expecting in two situations, including in Atlanta. Just trying to get a better sense why when we see strong bookings like that, we don't necessarily see it flowing through into an uptick in terms of how you're talking about revenue expectations. Thanks.

Sure. Maybe, Colby, I'll speak to Dallas first. So I can tell you that we've had – I know we had some decently sized wins in the Dallas market last quarter, in the fourth quarter, one with a partner that landed a healthcare company on our campus and then this quarter, we had a digital economy name with a decent kind of meg-plus deal landed on the Richardson Campus as well. And I know we have a – and that market specifically kind of has some attractive opportunities that we're working on right now with some of our largest customers looking to grow their footprint. I think, obviously, we're not alone in Dallas and we're competing with RagingWire and others. I think, those are the types of markets where you have to really differentiate yourself and bring more to the table of the customer, be it multiple U.S. markets, multiple geographic regions, a public company, investor-grade track record and 10-plus years of operating excellence. So there's a lot of things we do to differentiate our value prop with each customers and to have – and differentiate our relationships with the customers to win over some of them, may be in one or two markets, be it just in the U.S. In terms of the flow through, yes, we are quite pleased with the sign to commence creeping down to just under three months. I think you nailed the reasons in your own question, actually. We do have a range in the revenue line item. We do have some churn, which I highlighted but I would call churn with a silver lining because it's opportunities to, where we can reposition space and make incremental or are making incremental returns on that space and that's, I would say, that's part of the reason that we went with a $0.05 increase to the bottom end of our guidance and kept the top end constant.

And the next question will come from Richard Choe of JPMorgan. Please go ahead.

Great. Thank you. In terms of, I guess, you mentioned earlier, on colocation footprint, it's up to, up 17%. Where can we expect that to go over time? And then kind of following up with a lot of the signings questions, will that help kind of keep colocation at this $10 million and higher level given that colocation seems to be pretty steady relative to, I guess, Turn-Key Flex?

Hey, Richard, it's really all predicated on our success here. So we've taken an approach to incrementally grow our colocation footprint what we thought it made sense, be it in our Internet gateways, where we already had a dominant presence right in the (01:01:16) room, had a connectivity and ecosystems stronghold and could build out incremental pods for – to sell colo into all new places, where you put the flags, be it in Ashburn or Richardson and Franklin Park is probably the next stop on the North America campus and Dublin is probably the next stop on the European campus. And I know Singapore is probably the next step on the Asia campus. But we're doing it very incrementally, call it 0.5 meg to 1 meg increments. We're not going to build a 5-megawatt, 10-megawatt colo all, and just waiting to fill it up over a longer time period. And the other thing I'd say, you have working against in the pie chart is that we do have – I mean, we're still doing pretty strong larger footprint scale wins. Scale was 61% of total signings during the quarter. And we have – that part of the pie is growing at the same time. So I wish I could tell it's going to be exactly this but we're trying to make sure we have the offering for the full product suite, the cage or (01:02:17) cabinet up to the multiple megawatts halls. And depending where demand and customers grow, that's going to (01:02:23) get bucketed between a colocation or a scale customer suite.

And I know it's very volatile quarter-to-quarter but in just kind of eyeballing the new leases and renewals, it seems like the contract lengths are extending out a little bit longer for the different products versus the last 12 months. Can you give us any color with regard to that?

Two trends, I would say, bigger the deployment, longer the term. If a customer wants to do a massive deployment, with us at least, they want to go 10, 15 years and we – that's something we appreciate and we want them to go 10, 15 years given the concentration risk of when that one expiration comes due. So anything kind of call it, 5, 10 years or north, we're trying to push for longer and the customer usually is also pushing for longer customarily. Secondly, you'll see our Powered Base Building renewals, that's – those are – just to remind you, those are places where we own a highly improved shell and the customers put on their own dollar the full build-out of the last, call it, 70% to 80% of the infrastructure. They've got lots of dollars sunk in the space and you can see those renewals when they do come through, they have customers contracting for a longer time period than a fully built out suite.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to hand the conference back over to Bill Stein for his closing remarks.

Thank you, Denise. I'd like to wrap up our call today by recapping our highlights for the first quarter as outlined here on the last page. One, we retooled our sales force to better align with our customers' buying behavior without sacrificing current period results and we delivered robust bookings during the first quarter, up over 50% from the previous quarter. We delivered solid current period financial results, beating consensus estimates by $0.06. We raised the low end of our guidance range by $0.05, reflecting the out-performance during the first quarter as well as our growing confidence in the outlook for the balance of the year. And finally, we further strengthened our balance sheet by paying down high coupon debt and preferred equity. We finished the quarter with our debt to equity ratio below 5 times, fixed charge coverage above 4 times and Standard & Poor's revised their outlook on our BBB flat credit ratings to positive. Last, but not least, I'd like to say thank you to the entire Digital Realty team whose hard work and dedication is directly responsible for this consistent execution. Thank you, all, for joining us, and we look forward to seeing many of you at NAREIT in June.

Thank you, sir. Ladies and gentlemen, this conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.