Hello and welcome to the conference call. This call is being recorded for replay purposes. Today's presentation will be in a listen-only format. Following the presentation, there will be a question and answer session. Instructions will be given if you would like to ask a question at that time. I would now like to introduce the host of today's conference Mr. Jason Starr, Director of Investor Relations. Sir, you may begin.

Good afternoon and welcome to our Q2 2007 results conference call. Before we get started, I would like to remind everyone that some of the statements that we will be making today are forward-looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements and maybe effected by the risk we identify in today's press release and those identified in our filings with the SEC, including our Form 10-K filed on February 28, 2007 and Form 10-Q filed on May 2, 2007. Equinix assumes no obligation and does not intend to update forward-looking statements made on this call. In addition, we will provide non-GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures and the list of the reasons why the company uses these measures in today's press release and on the Equinix Investor Relations page at www.equinix.com. With us today are Steve Smith, Equinix's Chief Executive Officer and President; Keith Taylor, Equinix's Chief Financial Officer; and Margie Backaus, Equinix's Chief Business Officer. At this time, I will turn the call over to Steve.

Thank you Jason. Great to have everyone on the call today. And as you can probably see by our results, we've got a great quarter by any standard. The biggest event of the quarter was our announcement of our intention to acquire IXEurope. As you may have seen last week, we increased our total offer to 270 million pounds sterling plus the assumption of debt. Our original announcement of our intention to acquire IXEurope attracted an unsolicited approach by another party which clearly reflects the value of this company. With the increased offer, we received hard irrevocables from their two largest share and the Board of Directors, which represents approximately 67% of the existing shares to vote favor of this acquisition, which we expect to close in the mid September timeframe. As we stated in June, IXEurope is our preferred platform and leadership team for our entry in to Europe. Equinix will become the only global provider of carrier-neutral colocation services with over 30 data centers in 9 countries and 17 markets. This revised announcement also enables both organizations to focus on key transition activities and minimizes the risk of further distraction through the targeted close date. So, we are real excited about this combination and the growth synergy that creates. Although the amount of information we can disclose before closings remains limited, we plan to provide you with our longer term expectations for this business as soon as practical. As far as the business itself is concerned, as we stated on the last call, we intend to do minimal integration of this company. IXEurope's business is running very well and the integration will primarily focused on accounting, compliance, and importantly, ensuring customers from both companies have access to a global seamless offering as soon as possible. In the mean…

Thanks Steve. Good afternoon. I pleased to provide you with the second quarter results and some additional perspective on the quarter's performance. In discussing the quarter and any of my forward-looking statements, I've not taken into consideration the effect of IXEurope acquisition. So, let me get right into it. As Steve mentioned, our Q2 revenues came in at $91.8 million, an almost 8% increase over the previous quarter and up over 34% compared to the same quarter last year. Our US revenues were 85% of the total revenues and recurring revenues increased to 96% of our total revenues. During the quarter, revenues were favorably impacted by possibly $775,000 in unbilled power services related to prior periods, offset in part by a $200,000 customer credit related to as disputed billing. Revenues were well above our expectations for the quarter. We've benefited from accelerated installations related to our strong bookings in the prior quarter and we've experienced better than expected in-quarter activity. Also, we continue to enjoy a favorable pricing environment as we've increased list prices on most of our service offerings while continuing to move customer contracts to market rates. Finally, our Asia markets continue to show strength in quarter, in particular Sydney and Hong Kong. Revenues attributed to our 3/2006 US expansions and the Tokyo expansion totaled $9.4 million in the quarter, while our recently opened DC4 IBX generated revenues of $2 million in the quarter, about an 8 fold increase over Q1. Recurring revenues in the quarter were $87.9 million, a sequential 9% increase over the previous quarter and a 35% increase over the same quarter last year. In absolute dollar terms, this was the highest quarter-over-quarter increase we've ever experienced at $7 million. Non-recurring revenues for the quarter were $3.9 million. Looking at churn, as expected, our Q2…

Thanks Keith. I'd like to now take a moment to give you an update on our expansion activities. They are going on in seven about 10 markets. We remain on track or ahead of schedule with the four projects anticipated to open in 2007 -- Chicago, New York, Singapore, and Tokyo. In Chicago, we expect a late September, October opening date. Based on the strong pipeline for this new IBX, we now have the flexibility to assess whether an anchor tenant makes sense here. In New York, we are now targeting a late October-November open date, and are very confident that one or perhaps two anchor customers will be signed well in advance of opening. In Singapore, I am please to report we've just opened the first phase of our expansion there ahead of schedule and we've already begun installing customers, including a very large anchor deployment by Yahoo!. The first phase of this expansion is 450 cabinets and the second phase is expected to have approximately 450 additional cabinets later in the year for a total of 900 cabinets. Finally, in Tokyo, we are also ahead schedule there and are now accelerating the timeframe to open an initial face in August, which we had originally targeted for the fourth quarter. You will see in our CapEx guidance we are shifting approximately $10 million in CapEx for this project to 2008, which is when we will open the second phase. Finally, we are not making any adjustments to the total CapEx estimated for any of these projects with a minor adjustment in Singapore. Shifting to 2008, as you know, we have already announced three expansions we expect to open in Washington DC, Silicon Valley, and Los Angeles. In DC, we have begun work on our DC 5 Greenfield and now…

[Operator Instructions]. Our first question comes from Jonathan Schildkraut with Jefferies. Jonathan Schildkraut - Jefferies & Company: Good afternoon.

Hi Jonathan. Jonathan Schildkraut - Jefferies & Company: Thanks for taking the questions. I have a couple of questions, the first is if you could talk a little bit more about the Tokyo churn as well as the interconnect revenues in Asia-Pacific market going up 19% quarter-over-quarter and then if could couple that with the two phase build-out, what are the cabinets in each of those phases?

Okay, Jon, what I'll do is that I'll take at least the first part of the question, talk about the churn and then I'll pass it to Margie just on the overall interconnection theme in that market. But there was a large financial institution in the Tokyo market. As I mentioned sort of in the my script, there was an anticipated churn, we negotiated with them two years ago, and we knew that this would be coming out in this particular quarter, in Q2. And again, given the fact that we are constrained in the Tokyo market, it was something that not only did we anticipate, that was something that we were looking forward to. As a reminder, our Tokyo market drives the high MRR per cabinet out of all our IBXs, not only in the Asia marketplace, but also in the U.S. And so, this was something that was thought of as a very favorable result. Interconnection, do you want to touch that one?

Yes, Jonathan, our interconnection in Asia has kind of good time, and we are actually having our Tokyo Peering Forum today, which we've great attendance at. But overall, we continue to see the number of trial participants that we had on the Tokyo switch continue to convert over to paying customers. So, out of the total core count of 501, 63 of those were in AP and in addition to that, we're now starting people to see ramp up on 10 gig in Asia as well. So, content distribution customers, we had a couple of those convert to 10 gig in Asia as well. So we continue to see real strength there. So, I think it's a real good new story.

And so your last question, Jonathan, was just on the CapEx attributed to the expansion. As you know, we're going to spend between $25 million and $30 million on that project. What I have done to sort of better optimize the... basically the construction effort, it's broken down into phases. And so although the first phase is accelerating and opening up in sort of the August timeframe, the second phase, when you sort of couple... the second phase then gives us the latitude to push some of the CapEx out into 2008. But having said that, with Phase I plus the capacity that we have on the existing Tokyo IBX, it gives us sufficient capacity in the market to support the customer demand.

I am sorry, one thing I'll add to that, Jonathan, is we just did a really in-depth actually last weak with view of all the demand in Tokyo, and kind of what we're seeing there and it is really phenomenally strong. And I'm pretty tough on like demand analysis. So, it was really very good in terms of kind of the big opportunities we have there and so bringing in the Tokyo capacity early, I think, is a really good new story. Jonathan Schildkraut - Jefferies & Company: We had 740 cabinets, I think, coming on in Tokyo in total. Is that still the number just spread out over two phases or has the number gone up?

It's still going to be 740 cabinets, Jonathan. Jonathan Schildkraut - Jefferies & Company: Alright. That actually brings up another question, as we head into the third quarter here, should we be thinking about any market as capacity-constrained? Obviously, you are brining on 200 cabinets in Secaucus. I am wondering if those are kind of available for sale yet, or if they come on over the course of the quarter, and maybe if you can comment on available capacity in Chicago?

Okay. Certainly in some of the markets, we will be constrained recognizing that obviously we've had great momentum in Q1, and certainly with our Q2 bookings. And so from a revenue perspective, I don't think per se you are going to... you'll feel that in the Q3 results. But we are going to be constrained in Chicago market pending the delivery of the Chicago 3 building. We are of course constrained in the Dallas market, but the scenario that we have not yet chosen to make up for their investment. And of course, the New York market pending the delivery of our New York 4 building, we are going to be constrained to that market, recognizing we are bringing on 200 cabinets this quarter, this coming quarter being Q3, but we believe that we are going to be able to sort of meet customer demand for those 200 cabinets relatively quickly. So, I think in all three of those markets we will be somewhat constrained. When I look to the Asia market, again, with sufficient capacity in Tokyo, Singapore with their expansion coming online, and Australia with their recent augmentation, we feel we have sufficient capacity in each of those markets. And Hong Kong although is reaching more critical level, there is no update in that particular market. Jonathan Schildkraut - Jefferies & Company: Great. I will circle back in the queue for some more questions. Thank you.

Thank you.

Our next question comes from Chris Larsen with Credit Suisse.

Hi, thank you. Clarifications for Keith, first, could you give me again the quarter ending racks? Was the 18,800 or the 19,200 was the quarter ending?

I see there is a little bit of an inconsistency between our press release, but on a net... the end of the quarter was 19,200; on a weighted average basis, it was 18,900.

Thank you. And then I also just want to confirm the revised numbers do not include IXEurope and you'd expect those revised estimates when that deal closes perhaps on third quarter --?

That's correct and as you know, we are anticipating that deal to closes, as Steve mentioned, in mid-September and then once that's done, we will... as we look to our Q3 earnings call, we will certainly give an update on the acquisition and give you some clarity on what the go forward business would look like.

Okay, thanks. Keith, is there an impact to operating cash flow from the purchase of Silicon Valley or was that capitalized that lease that you are --?

That's a good question, Chris. No, the operating lease was.. it was flowing through operating result. It was treated, of course as an operating lease and therefore flowing through operating results and affecting EBITDA. So, we are going to get a benefit on a total year basis of roughly about $2.2 million to $2.4 million related to the lease, but that's going to be offset by roughly $1 million in taxes. So, net benefit on a quarterly basis is going to be about $300,000 at this stage.

Okay, great, thanks. And then I had couple of questions, well, operation maybe more for Margie. The 365 main had an unfortunate incident, I guess, yesterday, do you expect to see some pickup from some of those customers that are going to say, look, we want the six-nine's reliability? And then maybe you could quantify, you said that the number of your contracts are still below market. How much is still below market and how far below market are those contracts?

Yes, so, let me talk about the first one. It's funny when I saw that happen yesterday. You guys saw we just announced Netflix, and Netflix is one of the ones that were down in 365 Main yesterday. So, yes, we are starting to see some movement. So, the six-nine's reliability, as I talked to a number of press people yesterday afternoon, is significant and you guys [ph] probably talked to the press around this morning, there are some fairly frustrating customers. So, we will see what we pick up around that. We do have availability in Silicon Valley. So I think that there is plenty to be gained there. Secondly, on the contract, I will say that there are a number. I would say, however, we have touched a fair amount on the base at this point as it relates to bringing them up to market rate. So you will continue to see some uplift in the overall MRR as we continue to feather through some of these price increases. But you won't see a big fork life upgrade in terms of what we've done over the past 18 months in getting some of these price increases out to customers.

Alright, thanks a whole lot. I appreciate it.

Thanks Chris.

Our next question comes from Michael Rollins with Citigroup.

Hi, good afternoon.

Hi Mike.

Hi, Mike.

Just a couple of questions. And forgive me if you gave this out, what was the ending customer count? [Multiple Speakers]

And then the second question I had is are you doing anything different or are you examining the potential of longer term contracts with escalators in them? And if you can talk about how the process is signing up customers is the same or different today versus a year ago as you are redoing the older outdated contracts? The last question I had, if I could just throw one other in, in places like Chicago where you have been out of capacity to sell for the last few months, how does that change if at all the fill rate when Chicago opens? Does that help accelerate going from zero to significant cash flow positive or some greater utilization rate than if you were selling the capacity on a smoother basis over the last, call it, six months? Thanks.

Sure, Mike. I'll start out. The customer count was 1,373, as I mentioned. And on the contractual side, as I think we have mentioned previously, we are looking at longer term contracts. I think our average contract now is in the two year range and we have been incenting and the sales force is looking for longer term arrangements with price escalation built into them, so it can protect against power etc. So, yes, we have been looking for that with good receptivity from customers. So I think we'll start building a longer term backlog of customer kind of length of contract here as we go forward. And on the Chicago fill rate, may be Margie could you answer that.

Yes, a couple of things. One thing I just want to make clear, Mike, to make sure we are on the same page here is even though we say we are dark in the market, we saw a fairly good clip of growth in cross-connects in Chicago. So, even though we are dark from the space perspective, we continue to see nice amounts of revenue flow through those centers that we consider "fall" at people order more cross-connects, especially in that market given it's an FX market. That being said, I think the really good news about both New York and Chicago, I was actually looking yesterday at kind of what the high point in the reserve rate are starting to look like for those centers. The good news is given the value proposition to customers around FX and some of these other kind of proximity trading advantages we are seeing, customers are waiting. So what you will see is a nice backlog of customers, nice reserve rate of customers as those two centers come to market. So we are starting to sign customers to-date with those markets. And we are right in the zone, customers typically start signing within a four to five-month periods is where they can get out and actually see what they are buying. So, now you will start too see those reserve rates kind of climb a little bit.

Thanks for taking my questions.

Thanks Mike.

Our next question comes from Manny Recarey with Kaufman Brothers.

Hi Manny.

Hi, how are you guys doing? Thanks. Just one question, just trying to understand the guidance a little bit and the revenue is going to increase $4 million to $5 million, but your OpEx is going to be kind of like flat or could even be down a little bit. Can you explain the dynamics of what's going on there?

Manny, are you referring to the total year or the given quarter?

No, I am sorry, the third quarter.

Okay. So a couple of things. So, clearly as you can see, our revenues are going up or taking up to midpoint of $97 million for Q3. And what you have also probably noticed now is that despite the fact that we had 63% cash gross margins in Q2, we are actually suggesting that's going to go down to about 61% in Q3 as a result of the couple of things, number one, as I mentioned, we have seasonal fluctuations in our pricing related to utility costs and that's going to add about $1.7 million we estimate today in incremental costs in Q3 over Q2. In addition, we are going to... in the latter part of Q3, we are going to be hiring staff for the new expansion projects. And so that cost is going to start pushing through the operating line. So as a result, despite the fact that we are growing the revenue line, we are investing in the cost of revenue line. And then our SG&A, as we layer in some of the staffing that were not hired in Q2 and will be pushed into Q3 results in us just taking our EBITDA guidance up on a relatively small amount.

I certainly understand what's going on with the cost of goods, just it's maybe my math is wrong, but for the second quarter, your SG&A was like $22.8 million and now you are... you just said you are going to be hiring people which makes sense because you are expanding adding new data centers, but your SG&A guidance is $22 million to $23 million.

Yes, Manny. So the delta one, that is, as you'll remember, we recorded a $1.4 million charge in Q2 related to the negotiated settlement. And as a result, that's not going to of course recur for Q3. So basically when you take that out and then you invest in the staff, you basically are able to keep your cost flat quarter-over-quarter.

Thank you.

Thanks.

Our next question comes from Thomas Watts with Cowen & Company. Tom Watts - Cowen & Company: Hey guys

Hi Tom.

Hi Tom.

Hi Tom. Tom Watts - Cowen & Company: Just focusing a little bit more on some of the pricing issues, I know you had talked a little bit by getting anchor tenants for several of the new facilities. And I know, Margie, you previously said you are talking about migrating away from the anchor tenant concept or at least giving discounted prices for anchor tenants. So, could you just clarify that a bit.

Sure. Yes, so for anchor tenants and what we said, what Steve mentioned in his script was that we are evaluating whether or not we will take anchor tenants in Chicago. I think as we continue to see really good uplift from our FX base there, we are going take a look whether or not we want to do that frankly. In New York, it's a little bit different situation and we will see one, probably two anchor tenants, one of those probably being a strategic anchor tenant as opposed to an anchor tenant for just volume purposes. So we are being very thoughtful about it. I think it's... from a Chicago perspective it's important because we want to make sure that we can continue to serve that FX base as both of our Chicago one and two sites are full and customers continue to get the benefit... even though they are out a bit, they continue to get the benefit of that near zero second... millisecond delay there. So I think that's important. And again, I think it will be good for us in New York when ultimately you guys see who some of these anchor tenants are, I think you will see they are pretty strategic to our growth there. Tom Watts - Cowen & Company: Okay. And could you just comment on what strategic would mean to them, does that mean that they are going to drive other customers into there?

Yes, they will be magnets, caller magnets.

I think the other good news probably about that Tom is that I think historically here an anchor tenant will take up 15% to 20% of the capacity in that IBX and it's really good situation to not have to do that and be able to get multiple clients that can still fill that return that we are looking for. Tom Watts - Cowen & Company: Okay. And I know there was a previous question on pricing, but you have indicated pricing as generally stable. And I'd say, on the same data center basis, excluding higher power build-outs, does that suggest that you are seeing prices overall flattening in the market that we are not seeing sort of annual price increases? I know that's what SAVVIS had indicated on their call.

No. I would just say no to that. First of all, you are seeing us continue to raise prices to the current base. We are getting very good prices in our new high power density IBXs. So, we saw a little bit of that in DC4, but as I look at kind of the pipeline for New York and Chicago, we are seeing very good pricing there as well. So I think those are very strong results and then new customers coming in, I think it was just the MRR up year-over-year with 6%. So I would say pricing in general given the competitive environment we are seeing and the value proposition to customers remains very strong. I would not say it's flattening. Tom Watts - Cowen & Company: Okay. And then just finally, AT&T commented on the growth opportunities they saw in this sector and the number of data centers that they are building. Are you seeing them in your specific markets and to what extent are they pre-marketing spaces well prior to construction?

I think everybody who is building right now has pre-marketing space, but don't forget both SAVVIS and AT&T are selling to a different customer, right? So they're selling to the customer who want end to end managed services etc., a little bit different as you are well aware than the customer that would naturally come to us. But I can tell you the demand across, I think, all of the markets whether it's wholesale for the REITs [ph], managed services or kind of more pure colocation with the interconnection model, it's very, very strong. So all of those are rising, but I can tell you with then... and let me just give you a thought of interesting step this quarter. When I looked inside our new customers that were signed, of course, those 96 customers that were signed this quarter, almost 79% of those customers were coming in for the first time; either coming in from in-sourced applications outside or new to colo. So I think that's a pretty good indicator that the growth we are seeing, especially in our new customer base is coming from people that are brand new to that. So we are getting a disproportionate share of that. Tom Watts - Cowen & Company: Excellent. Margie, thanks.

Sure.

Our next question comes from Rod Ratliff with Stanford Group.

Very nice quarter guys, very nice.

Thanks Rod.

Margie, I think you might have touched on it a little bit on the conference call back at the beginning of July surrounding the IXE acquisition, but just given the demand in APAC for interconnect services, do you think that there is probably ultimately really robust opportunity to layer that on to the operations that you are going to purchasing in Europe?

Let me split out interconnection and peering in the European market and contrast it just for a minute with Asia.

Okay.

So when you saw in Asia which is why I think we are seeing a nice uplift there is you saw some of the peering sites and other things over there where fairly small amount necessarily state-of-the-art kind of peering sites etc. What you see in Europe, however, is very different, right? So the LINX, the AMSIX, the DICIX, all of the big peering sites over there are very advanced customers, like them they are non-profit consortiums, their service is very good, they've implemented 10 gig. So in terms of the overall service to customers, it looks different. So I think what you'll see from us over time is we do see good opportunities to do some interesting things with inter-connection in Europe that will most likely be around things like FX where we've seen, as you know, great uplift in the US with that. They also have a very nice FX base. So being able to put customers London, Frankfurt, New York, Chicago is a very strong value proposition. So I think that's one place we will see some good interconnection. I think we will be working with the established peering points over there to see how we can help them with their growth and use them as a magnet to bring in for future interconnection opportunities in our center. So I think as I said on the call in July, I don't want to kind oversell this at this point because it really is a very established market over there as it relates to the peering points. But we do see some nice opportunity to kind of move on with... excuse me, change the game a little bit with interconnection in Europe.

Does the regulatory environment in Europe enter into the equation at all? Is it any tighter or how would you characterize that?

I am sorry, I missed the first part of your question.

The regulatory environment.

Oh, yes.

In Europe.

Yes, no, that's... so kind of interestingly enough, interconnection in Europe has been driven not by regulatory reasons per se, but by customers. So the consortiums that exist on the peering side and the traditional pricing on the interconnection, as many of you guys know, interconnections to our version of a cross connect in Europe or any of the European players is typically 10%... priced at 10% or less of what our prices are here. And that's driven more by just kind of how that industry has evolved in Europe, more than anything else. It's not really a regulatory issue. So I think the really good news is here, is that both IXEurope and Equinix share a really nice customer base around some of these customers that we look to do this with, and with our relationships with the big content guys here and the uplift of customers that have taken a real interest in moving to Europe with us, we've got a really good kind of backlog of customers to start moving to a different interconnection model. But I will just caution you I think that will take some time.

Okay, thank you.

Sure.

Our final question comes from Jonathan Schildkraut from Jefferies. Jonathan Schildkraut - Jefferies & Company: Thanks again. This is a question for Keith. Keith, I am looking at your guidance for the year and for the following quarter. And just to kind of get you down to your net income numbers, it looks like there will limited growth in the D&A side in the next quarter, but we would see start to really kind of scale up as we exited the year. Does that sound right?

That's correct. In the end, that's the one number that we don't give, but to give you a sense for D&A, it will be... for total year will be just under $97 million. Jonathan Schildkraut - Jefferies & Company: Thanks a lot.

Thanks Jonathan.

Thank you.

And this concludes our conference call for today. Thank you very much for joining us.

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