Good afternoon and welcome to the Equinix First Quarter Earnings Conference Call. All lines will be able to listen-only until we open for questions. Also today's conference is being recorded. If anyone has any objections, please disconnect at this time. I'd now turn the call over to Katrina Rymill, Vice President of Investor Relations. You may begin.

Thank you, Jennifer. Good afternoon and welcome to today's conference call. Before we get started, I would like to remind everyone that we'll be making today are forward looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements, and may be affected by the risk identified in today's press release. And those identified in our filings with the SEC, including our most recent Form 10-K, filed on February 22, 2019. Equinix assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. In addition, in light of Regulation Fair Disclosure, it is Equinix's policy not to comment on its financial guidance during the quarter, unless it is done through an exclusive public disclosure. 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 a list of the reasons why the company uses these measures in today's press release on the Equinix IR page at www.equinix.com. We have made available on the IR page of our website a presentation designed to accompany this discussion, along with certain supplemental financial information and other data. We would also like to remind you that we post important information about Equinix in the IR page from time-to-time and encourage you to check our website regularly for the most current available information. With us today are Charles Meyers, Equinix's CEO and President and Keith Taylor, Chief Financial Officer. Following our prepared remarks, we will be taking questions from sell-side analysts. In the interest of wrapping this call within an hour, we would like to ask these analysts to limit any following questions to just one. At this time, I will turn the call over to Charles.

Thank you, Katrina. Good afternoon and welcome to our first quarter earnings call. We had great end to the year delivering our best Q1 ever, including a largest revenue step up in our history, and our second best net bookings quarter, reflecting strong customer demand and lower churn. Our booking span more than 3,000 customers, with cross border bookings up substantially year-over-year. We processed over 4,000 deals in the quarter, highlighting the diversity and high volume nature of our retail colocation business, and the scale we built across our entire go to market and customer support engine. During the quarter we also announced adjustments to org. structure to globalize our operating model, scale our business, and execute with increased velocity against the growing opportunity for Equinix has a strategic platform on which customers architect their digital business. We moved three company veterans into new roles, including concentrating all of our customer facing functions into a single global organization under Karl Strohmeyer, enabling us to provide consistent execution and deliver increased value as a trusted advisor to the businesses undergoing digital transformation. As depicted on slide three revenues for Q1 were $1.36 billion, up 11% year-over-year. Adjusted EBITDA was up 12% year-over-year and AFFO was meaningfully ahead of our expectations. Our market leading interconnection franchise is performing well, with revenues continuing to outpace colocation, growing 12% year-over-year, as the cloud ecosystem continues to scale. These growth rates are all on a normalized and constant currency basis. Penetration in lighthouse accounts increased nearly 50% of the Fortune 500 and 35% of the Global 2,000 showcasing the expanding opportunity as we deepen our reach into the enterprise. We are now the market leader in 16 out of the 24 countries in which we operate, and we're expanding our platform with 32 projects announced…

Thank you, Charles and once again good afternoon to everyone. As highlighted by Charles we're delighted with the start of our year delivering great Q1 gross and net bookings alongside our 65th consecutive quarter of revenue growth. With this momentum we're raising 2019 guidance across the board and are tracking well against the target set at our 2018 Analyst Day. MRR yields remained firm and MRR churn was lower than planned, allowing us to retain more value in the business by still fulfilling a diverse set of new customer demands weighted towards smaller deal sizes. We're continuing to invest in our growth and scale both as it relate to our organic expansion, as well as new product and services initiatives and at the same time, we've been able to leverage how we spent our SG&A dollars, reflecting our priority to increase the operating leverage in the business and reduce the SG&A line as a percent of revenues. Now I will cover the quarterly highlights. Note that all growth rates in this section are on a normalized and constant currency basis. As depicted on slide four global Q1 revenues were $1.36 billion, up 11% over the same quarter last year and above the top end of our guidance range. Nonrecurring revenues were 6% of total revenues, an 11% increase over the prior quarter and reflect the inherent lumpiness of this revenue line. We expect nonrecurring revenues to remain elevated in Q2, but given our current visibility to customer activities, we expect to return to more typical levels in the second half of the year, which is reflected in our guidance. Q1 revenues net of our FX hedges included a $3 million positive FX benefit when compared to our prior guidance ranges. Global Q1 adjusted EBITDA was $660 million, up 12% over…

Thank you, Keith. In closing, we believe that digital transformation will persist as a driving force in the global economy. And we are positioning ourselves to seize that momentum. With our unmatched global reach the industry's most comprehensive interconnection platform and unparalleled track record of service excellence, and an expanding portfolio of edge services, we remain confident in our ability to deliver superior value for our customers, allowing us to build on and extend our market leadership. We are tracking ahead of our 2019 targets. And we have a clear set of priorities for this year to drive durable and growing AFFO per share for our shareholders. So let me stop here and open it up for questions.

Thank you. [Operator Instructions] The first question comes from Sami Badri from Credit Suisse. Your line is open.

Hi, thank you. Looking at your average revenue per cross connect in Europe, it looks like it was down double digits year-over-year in 1Q, 2019. So we just want to get a better idea on the market dynamics that are happening there. Just the industry's perception that that business is stabilizing and standardizing in Europe, and with your exposure to financial services, you think that you would see a bit of a mix shift upward? Could you just give us some color on the dynamics in the region?

Yes, I would say and if I look at that particular step. And I would say more, more generically. I think the interconnection business across the globe and including - inclusive of EMEA continues to be very strong. And so I think the demand for interconnection, both across our full interconnected portfolio of interconnection services continues to be solid. As we've mentioned we are in the process of sort of normalizing our interconnection pricing to Equinix levels across the board. So I'd expect that over time, we're going to continue to see an uplift in terms of our unit performance in that region. So at a macro level, interconnection in Europe continues to be very healthy with strong demand.

Sami the other thing I would just add, one of the things we did, we adjusted some of the cross connect counts in the last quarter, as we reconcile some of the Telecity install base. And so the revenue was still there, but the count was adjusted upwards to reflect the number of units. And so you're seeing a little bit of a reduction because of that, but there was nothing fundamentally that has changed within our pricing model. And in fact, as Charles said, we're normalizing our pricing structure as we roll that out through Europe in 2019.

Yeah, that's right, Keith, I forgot about that. So that's maybe a bit of an optical thing. It was - essentially that was whenever we do an acquisition we take a fairly conservative view account because often times the installed base is when you end up going in and doing the audit ends up differently. And so in this case we had that reserve essentially a reserve setting out there on a unit basis, but the revenue was there and then we bought it in so that shows a bit of a - sort of an optical disconnect.

Got it, thank you.

On that chart on the Q4 earnings deck Sami.

Got it, thank you. Yes, I saw the changes in Q4 specifically. The other question I had was on ECX and maybe we can just get a better idea on the percentage of your customers that are using the ECX fabric to connect to multiple regions. Just as we get an idea on how many clients or customers are leaning on specifically this as the key differentiator versus just deploying in their more traditional sense. We just want to get - could you give us any kind of percentages or a quantified idea that'd be great.

We do have the obviously the 1,500 customers so you get a sense for just how many of our customers are actually implemented on it and you also get a sense for how much upside remains for us there. I think in terms of the total percentage of those customers that have yet sort of avail themselves of the multi-regional connectivity aspect of ECX Fabric. That's still relatively small, but with a lot upside opportunity there. It is actually well ahead of what our plan was and so we're seeing uptake on that faster than we had even expected. But it's still relatively small percentage I would think of the total number of customers that are yet using the cross regional, but I think that they are absolutely seeing it though as a key differentiator. I think the ability for them to house infrastructure in proximity to the multi-cloud generate the performance and cost benefits that are part of being on platform Equinix and then have the confidence that they can interconnect to the rest of their own private infrastructure and or to cloud endpoints that aren't in their chosen location is a compelling value proposition for them. And I will tell you that as I'm out with our sales teams they continue to see ECX Fabric at least as the primary hook for conversations with customers these days, and so very pleased with how that's playing out in the market.

Great, thank you. And then my last question has to do with your JVs that were announced and you've laser focused on Europe and based on what you laid out in your 2018 Analysts Day and some of the return profiles in the JV structured agreements. Are we looking at similar return profiles in these future JVs that are coming and that you laid out in the 2018 Analysts Day or should we expect it to look a little bit different given just given some time as digestion and partnerships are starting to form?

Again there's no - we haven't announced any - you are talking specifically about the hyperscale JV.

That's correct.

Yes, no announcements there yet, as we said in the script we expect that that will be announced and we are focused on EMEA as the first JV opportunity tracking very well there feel very good about the financing partners we're talking to as well as the customer uptake. What we showed at Analysts Day I think continues to be consistent with our expectations, I think we're going to see really good solid headline returns on those projects. And I think our pipeline reflects is supporting that notion right now. And then Equinix just due to the fee structure and the flow fees for us as management fees and some of the other fees that float us in that we'll see some upsize returns from that. We'll get good solid equity returns and then see some juice from the fees as well. So we feel good about the structure overall, tracking well and I think that - I don't think that the structure would look meaningfully different overtime. Keith unless you had different view on that.

Thank you.

We'll update you in Q2, again we're excited to announce the final formation of the JV and the JV partner and we'll discuss that in the Q2 timeframe.

Great, thank you.

The next question comes from Jordan Sadler form KeyBanc. Your line is open.

Thank you, good afternoon. I had a follow up on the JV, I don't want to jump the gun relative to your planned announcement, but you made the comment of no impact I think to the P&L in 2019 relative to guidance, I just wanted to clarify what's specifically you're referencing if it was guidance or the actual P&L? And then because I would think, as you just mentioned, Charles, there could potentially be enough an uplift to you guys as a result of a fee stream, especially if there's some stabilized assets being stuck into the JV. Then have a follow up.

Yes, so Jordan, let me just touch base. So on the last earnings call, what we did do is we gave you an update of basically the net burn we're investing in the hyperscale initiative team right now are what we refer to as our hit team. So all the - so there's a lot of if you will cost going through the P&L today and so that is embedded in the guidance. What you will what you have not seen is, what we said was on a go forward basis, the AFFO impact because we're in the development phase, and we'll be putting some stabilized assets into the JV taking some cash out and investing in new developments. There will be no meaningful impact to AFFO per share when we make that announcement, but what that - what that doesn't say is that there is an anticipation of a meaningful amount of cash, as Charles alluded to on the last earnings call of cash coming back into the business. And then that's going to then fund the future developments. And so there's a lot to talk about with respect to JV, but we don't want anybody to assume any incremental AFFO per share in fiscal year 2019 related to this.

Okay. It sounds like there could be - it could be a flows issue, as you'll have a cash flow coming in. And over time - that'll drag initially and over time, that'll be redeployed from if I am not putting words in your mouth.

It goes back to really what Charles said, when you look at - if you look at the assets on at the project level very good returns for both ourselves and what we believe to be our financing partner. And so we are happy at the project returns. In addition, Equinix will receive a certain amount of fee income associated with it. So when you look at this as the return on our equity. It's in a very, very attractive investment decision for us. And it's a good project return for our partners. And then there's always the potential for the upside at some point in the future, depending on how we liquidate the asset.

And then lastly, could you speak to the growth in physical versus virtual cross connects? I appreciated the disclosure you guys have been providing there. I'm just curious; the virtual cross Connect volume clearly is growing at a faster rate if make sense. Just maybe talk to what your expectations would be there one versus the other. And then if you could elaborate on pricing?

Sure, sure. Yes, we see we see continued health across the intersection portfolio. And I think that's one of the key differences is that we bring a very rich set of interconnection options to our customers to solve a very different and varied set of used cases for them. And so depending on what they want to accomplish, depending on their confidence in traffic flows, depending on the timing and duration of their needs, they might choose different alternatives. And so, right now, we are seeing tremendous uptake on ECX Fabric, particularly from enterprise connectivity to the cloud. That should be no surprise to anybody. And we expected that that will continue to be a very strong sort of element of our business going forward. But what often happens is a maturation and a staging of things where people initially sort of begin to test moving workloads into the cloud. They may do that over the fabric using - buy a port and then provision capacity to a cloud. See how that works. But over time, it's often more cost effective and were performing for them to actually move to physical conductivity private in an actual cross Connect at a future stage of the maturation of their cloud strategy. And so that's what we typically see as a customer sort of buying across that portfolio. And given whatever is right for them based on the particular needs of the used case. So, that's why we've said that we don't really - there's probably some very modest level of substitution, but we see them generally as complimentary. And that's why both of them continue to grow well. In terms of pricing, the individual unit cost for a virtual connect is lower, but you have to recognize that you do have to pay the upfront port cost to essentially enable those virtual connects. And so depending on how many virtual connects you might provision over a single port it can vary meaningfully. But in terms of yield to us right now, we're not seeing a dramatic difference. I think as virtual cross connect volumes scale, you will see a slightly lower average price point on virtual than physical. But again, the economics of both and return on capital for both of those products are exceptionally good for Equinix.

Thank you.

The next question comes from Philip Cusick from JP Morgan. Your line is open.

Hey guys, thanks. Two if I can, one for Charles, for the JV I think it's going to be different sales processes for different customers going forward between the legacy Equinix and the JV facilities, or do you anticipate those being a single sales process? I am just trying to think about how you plan to protect the high price and differentiated legacy business from being used to subsidize the new business? And then, for Keith, can you dig in a little more into the SG&A scaling? How should we think about this long-term trend versus revenue and what's being done to control costs? Thanks.

Yes, so let me take the JV first. As we said, one of the key things for us is that we wanted to be able to deliver a more comprehensive portfolio of offers to our hyperscale partners. As you recall, what I presented at the Analysts Day, we currently have and now well beyond this at that time, we were at a $0.5 billion a year business with the 12 top hyperscalers. And I showed how that was growing across the portfolio from sort of smaller, highly interconnected footprints up to sort of larger, more wholesale type, hyperscale type of footprints for different needs. But I think the bottom line is that we want to use our single unified relationship with that customer, our understanding of their needs and the trust relationship that we have, as well as the integration between our platforms to continue to service their needs. And - but there's - we see the opportunity as quite distinct though, typically they would be using Equinix facilities more for networking nodes, private interconnection nodes and those kind of targeted elements of their architectures. And looking more for availability zones and large server farm type of footprints in more the hyperscale arena. So we think there's a relatively clean line there for us to manage. And we think there's plenty of opportunity for both the JV and Equinix and our partner to do very well with those large footprint, as well as for us to continue to grow the targeted more interconnected footprints.

Okay.

And Philip on the second question on SG&A scaling, I think this is a journey as you can well appreciate. First and foremost, when you look at where we started our SG&A as we sort of top tick we were at between 22% and 23% SG&A as a percent of revenue and today we're closer to the 18% to 19%, with the ability to potentially scale that down further. But how we're doing it is across and I think it's important to understand, first and foremost, it really is about our team and taking our team and figuring out how to align them most efficiently. It is also about our systems and our processes. And the recognition that we're through many of the integrations that we've had, as a company as we have integrated different businesses and acquisitions into the - if you will, the parent company. And then you couple that with we've invested quite heavily in 2018 and certainly into 2019 in the procurement and strategic - procurement team and strategic purchasing team inside the organization. And that's certainly going to pay dividends as well as we continue to work to drive down our average cost units across many different functions and items. And then the last piece I'd just share with you is, as Charles alluded to on the last earnings call, we have talked about it previously, there's was element of - it's the savings we want to make sure we take the dollars and we put them and dedicate them in sort of in the right areas. And so we want to continue to take dollars where we can, where we can find those savings, and we put it back into the business to fund the customer facing initiatives, the new product initiatives, the go-to-market strategies, and alike. And so there's an element where we'll put it back into the business and hence invest in our future. And there's an element where we will drive margins up and that's basically returning to the shareholders in the form of a growing cash dividend. We are doing a real good job again of looking at our systems, our processes, allocating appropriately. And then the last piece I'd just say is, we're doing a real good job of prioritizing and prioritizing throughout the organization. We say here internally, there's never a project that we don't like that is always - they're always well intended, just so many projects we can do as an organization, but we can only do so much. And under Charles's leadership, we're really focusing on how to prioritize to the highest and best use of our capital and that's - again that's part of the reason that you're seeing our SG&A as a percent of revenues go down.

Thanks, guys.

The next question comes from Mike Rollins from Citi. Your line is open.

Hi, good afternoon. First, if you look at the nonrecurring revenue, it continues to be pretty robust. What is the stay [ph] about the installation and pace for the future? And also how do we think about the nonrecurring line item going forward? Thanks.

So Mike, one of the things I said at least in the prepared remarks, is we saw a meaningful step up in our NRR this quarter was up 11% quarter-over-quarter. It's roughly 6% of our total revenues. It is a lumpy - it tends to be lumpy as it relates in many cases to custom sales orders or specific goods for resale that we might enter into with some of our large strategic customers. And so Q1, yes, you saw a relatively large increase Q2. I think you're going to see NRR - we're guiding to NRR going down slightly quarter-over-quarter, it still elevated relative to prior years. And then going into Q3, Q4, you should see it start to step down to a more traditional level. So again, it's a reflection of the number of deals we're doing with customers, the amount of custom sales order work, and it will be lumpy. And what we're going to try and do is the best that we can anyways, we'll continue to guide to it, because I think it's an important element of things that could go up and go down over any given quarter, at least on a sequential basis.

Yes, Mike, I'll just offer also - I mean, I think it's part of the sort of the trusted advisor relationship were developed with our customers they really candidly, a big shout out to our global sales and engineering team around the world who does this phenomenal job of engaging our customers and developing a trust, level of trust there, where they're comfortable with us, implementing these really very strategic implementations that are central to how they do business and trusting us to do that. And so, it is something that we - honestly, we have to watch and be careful, we want to make sure it's an appropriate sort of piece of our mix of business. But we also - we think we can do it at attractive margins. It's something our customers really want us to do. But as we said, we right now are - we think we're going to continue robust through the first half of the year and we've got it to a little tapering of that in the second half of the year based on our visibility.

Thanks very much.

The next question comes from Simon Flannery from Morgan Stanley. Your line is open.

Great, thanks so much. On the hyperscale JVs good to hear the update on the EMEA, are we likely to see other transactions this year either in EMEA or other regions or is it likely to be one and then we'll maybe see more down the road? And then, secondly, any updates on merger integration for Infomart and Verizon. Where do we stand on some of that progress? Thanks.

Why don't I take the first one, push second one to Charles. On the JV we - the first one is probably the more complex one, it is a European based JV. There is a second one that is going to be forthcoming it will be focused on the Asian market, more specifically at least Japan to start. And then, we would anticipate other JVs after that. But still a little bit early Simon, but we are progressing with it shortly to the second JV. In both cases, we look forward to announcing them over the near-term.

And whether the second one would be smaller than the first one?

Well, second one will have probably less units in it to start as I said. But it's still a meaningfully science JV and again, initially dedicated towards the Japanese market. Whereas the initial JV in for Europe is London, Paris, Frankfurt and Amsterdam, gives you a sense. They are going to be somewhat market specific, they're going to be timing specific. And again, without getting into sort of the details the first one will have stabilized assets that we move into it on a go forward basis is unlikely stabilize assets would be moved into JV could really be about a partnership funding the hyperscale initiative.

And then quickly on the integration, obviously, we're pretty well progressed on most of that stuff. You see that in terms of pretty small stub left of integration costs, for the remainder of the year I think we took that down to $13 million, $2 billion down from where it was. So the bulk of the work is done, I would say that, again, we continue to be very pleased with both the financial and strategic benefits that we've gained from the variety of transactions that we've done. Specifically the Verizon you mentioned, I think we actually are seeing that seeing great bookings into those assets. We actually saw record bookings into the Verizon assets. But now they're really fully integrated into how we think about platform Equinix now, but we see great momentum in a number of those markets. I would say that we're still seeing a little bit of the churn tail on Verizon and it's not that it's bigger than what we thought. It's just that it's taking longer to work through and that's not really all that surprising. And it's a goodness thing. In the end we had - even probably had that revenue for longer than we anticipated, but it is causing a little bit longer churn tail and I think that deferring this sort of return to growth and a bit further into the year than what we had anticipated. So again really pleased with that transaction overall. Infomart that's progressing well, we actually have now a project underway that's going to put nearly 2,000 cabinets on to that campus and we feel very good about our ability to build the portfolio of offerings on the Infomart and really take what we think will be a really outstanding market position in a very large and important colo market there.

Thank you.

The next question comes from Colby Synesael from Cowen and Company. Your line is open.

Great, thank you. Two if I may. You added 4,400 cabinets billing in the quarter, which was down from the fourth quarter and a little bit at least to our number and you added 7,500 new cabinets to the base. Just curious that based on the 7,500 that you did add would you expect to step up in cabinets billing net add if you will as we go into the second quarter? And then, secondly, when I look at the EBITDA guidance for the second quarter, you are guiding to flat to may be down $10 million depending on where you come out, and I'm just curious what's behind that. I think that you mentioned part of the upside to gross margin in the first quarter was tied to lower maintenance and utilities, I'm assuming that that's one-time benefits so maybe that's what explains it. But I'm also curious what the margin profile on the non-recurring looks like and if that changes meaningful quarter-to-quarter. Thank you.

I will let Keith take second part there on the guidance, but on the cabinets adds, I would encourage just to look at sort of overall body of work over the last two quarters, right and look at the level of cabinet adds, the level of interconnection adds, the number of deals, the margin performance, the margin expansion. And so we continue to be extremely happy with the overall performance of the business and the momentum. I do think that cabinets billing as we've always said is a little bit depending on a variety of factors. Asia had a breakout quarter last quarter and then sort of you sometimes see a bit of a hysteresis from that. And so, I think right now we're seeing the level of cabinet ads, when we look over rolling four quarter averages that is super healthy for the business and would expect to continue to see that going forward.

And Colby s it relates to the second question there is certainly as we alluded to in our prepared remarks there's a number of things that went on in the first quarter and part of it is just the timing of expenses, part of it is utility based. If you recall on the last earnings call, we talked about the drag associated with utilities and it wasn't quite as anticipated in Q1, but on a go forward basis were planning utilities to continue to step up and so that's affecting to the tune of roughly 60 basis points. And then, the other part is to the extent they don't step up then that's something that would come back to the business of course, so much of what we experienced in Q1. Second part is just timing, again like anything, Q1 you've got Chinese New Year, you've got our annual sales kickoff and so there's cost to move around the quarter and our timing on when we make those decisions. So there is some investment that we're going to make in Q2 as we - relative to what we did in Q1. And then, the last thing I would just say is it's important to note when we originally started the year we thought that would take - we originally anticipated the margins would come down slightly. But those reasons why those big expansion drag, it was utilities, it was ASC 842 and the like. As we look forward now, we're actually taking margins up slightly to 48.3% for the year. And that also assumes that we still have roughly 100 basis points drag in the system, which is reflected in our bridges. And so, again, we recognize that it's not - we'd love to have all those nice straight lines and up into the right, but the reality of how we run a business and the global nature it causes different costs to fall in different quarters, and sometimes it's just timing based. And so, again, I just guide you to the fact that overall for the year, we're now raising our guidance, we raised our margins, and we still are preserving what we anticipate to be higher cost model going forward as it relates to utilities.

Great, thank you.

The next question comes from John Adkins from RBC. Your line is open.

Thanks very much. So I'm interested, I don't know if I missed this or not, but any sort of impacts that you're still seeing or expect to see from 10 to 100 gig migration? And then, secondly, just maybe to put a finer point on some of the SG&A questions, a lot of moving parts. But can you talk about projected ramps or not in sales engineering headcount, sales headcounts, and overall kind of shifts if there are any in kind of your go to market strategy?

Sure. So let me try to tackle all that. The 10 to 100 as we said last quarter, I think we reported last quarter about 7,000 physical cross connects, 1,800 virtual. So very much at the top end of our sort of ranges that we typically give a 5,000 to 7,000 on physical. We had 5,500 physical this quarter and 1,900 virtual. So we did see a bit of a - we saw some of the 10 to 100 gig resume in terms of that we have mentioned that there was a bit of a pause on that probably due to network moratoriums taking hold previously. So - but we still believe that the larger projects for 10 to 100 are very well advanced. And so we do think we'll see some tapering on that over the course of the year, we probably saw also a little bit of NSP, network service provider consolidation impacts in the quarter. And so with those things combined, when we look at gross adds, we're super pleased with the level of gross adds. Again, we do have a little bit of a headwind associated with the 10 to 100. And a little bit on the consolidation side, but overall, strong performance, and we do think that 10 to 100 will probably taper off, particularly in the Americas through the year we will probably see some of that in the other regions, but to a much lesser degree, given the concentrations of traffic. And then, SG&A, I think that we will ramp, we are expanding the go to market engine. And we have about 500 core bearing heads today, we will add to that in a - probably, over the course of the remainder of the year targeting maybe 5.25 or something like that. But, we'll add - we'll continue to add if we feel like we're getting good ramps to productivity. And yes, we are - we will add sort of the full contingent of resources around the headcount to ensure their success that includes both sales engineering, and solution architect and other support type resources. But we're being very careful about how we do that, to make sure that we keep the - keep our commitments to gaining some operating leverage in the business over the course of the year.

And John, if I could just add one more thing in that, I think it's important, if you look at the trend line over the last five, six quarters. You see that, yeah, we're continuing to invest in the sales and marketing area. And as Charles said, focusing on the dollars in the right area, at the same time is you're seeing on a cash basis the G&A dollar sort of remained flat. So it gives you a sense of, again, going back to my earlier comment as a percent of revenue SG&A on a cash basis is going down. But you're also seeing a greater investment in the front of house customer facing initiatives, which is exactly where we want to deploy our capital.

You also asked just a more generic piece about the go to market. I would just offer that, Mike Campbell, our Chief Sales Officer and Karl in his new role are working really closely together and continue to drive efficiency and effectiveness in the go to market engine overall. I think that includes a couple of prominent features. One, continued investment in the channel and partnering with a number of partners who are having great success in partnership with us, the likes of AT&T and Verizon and Orange and some great work with Cisco targeting some joint customers. So we're seeing we're going to continue to invest in the channel then we also are going to continue to add resources to both drive new logo capture as well as land and expand behavior with the logos we've already captured. When we look at it in terms of how much wallet share there is on some of the sort of Fortune 500 and Global 2000 customers that we've landed we think there's an immense opportunity. And so we're shaping both the sales rolls and the patches to make sure that we're continuing to drive that as well.

Thank you. And you mentioned channel, any kind of quantification I think you talked about successive quarters of 20% contributions or more. But how does that sort of break out by region? And then, my last question just on Asia Pac, China I saw the Shanghai 6400 cabbies and wondering kind of the expected ramp there, in the past I think you talked about maybe entering new metros in China or is the focus for the time being likely to be just on that one metro?

Yes, so on channel we are seeing - we had probably led in the Americas just a more maybe mature channel market and we've invested our initial sort of resources and dollars there. One of the things that I think we're going to see - we have seen improvements on and we'll see even more now with Karl taking a sort of consolidated global roll is driving a really consistent channel program across the world in terms of the resources that we have on the ground to do that. But all of them, all three regions are tracking very well in their embracive channel. That 20 plus percent number is overall, but I think - I do think that all three regions are tracking well in terms of embracing channel. And then as for China, again, I think we're seeing good response to the Shanghai capacity it's come online I think we're going to have to continue to monitor the situation in China carefully relative to kind of how much additional capital we would think about putting to work in that market. And we do have the JV relationship now which allows us we think a high degree of confidence in terms of how we've approached the market. But I think we'll sort of see how the capacity uptake and customer uptake occurs there and kind of revisit that as we go.

Thank you very much.

The next question comes from Nick Del Deo from MoffettNathanson. Your line is open.

Hey, thanks for taking my questions. You noted the cross border bookings were up substantially this quarter. Can you give some added detail on that front like what's your deal respond to that category? And if we were to think about bookings by the region where they were sourced rather than where the revenue was generated, how would your business be split between the three regions?

Yes, it's a great question, Nick. We do look at it that way and we have as you might expect I think just given the sort of typical maturation cycles of technology and how they sort of flow across the globe. We do have a very significant portion of bookings that are exports from the Americas based sales force to the rest of the world. But we've also seen continued efforts for the rest of the selling teams across the world to really embrace selling the global platform and again it is one other thing that is driving force for moving to this more globalized go to market model under Karl's leadership. So we look at that in terms of - we look at all of our deals in terms of where they are sourced, where the headquarter location is. And then we look at the assets and if it is - if there's a cross border flow there we consider that a cross border or global export booking.

Okay, makes sense. And then, one on Europe, I think you historically been willing to do more larger footprint deals in Europe versus other regions. What share of bookings in that region would you characterize as being larger footprint? And to what degree might the hit initiative siphon for often most deals and perhaps weigh on consolidated growth?

Yes, really good question, I do think that we have had a bit more of an appetite there I think that's impart due to the pricing sort of dynamics in Europe and our capacity situation there and a variety of other factors. But what we have done is really looked at what we think that our sweet spot is in terms of bookings. There's no magical spot I don't think, over time, we used to refer to large footprint as 250 kilowatt and above many years ago, and I think, now you're talking about probably more like megawatt plus type deals that are more in that really large footprint category. And so there's not a ton of those, I do think that we would - our desire would be to funnel those to the JV, because that's the right asset for the - we have a long use the sort of right customer right application in the right asset kind of mantra, and it's one we strongly believe in, in terms of driving returns and appropriate allocation of capital. So, I think on the very large footprint with the hyperscale community, we're going to - we would expect to see those begin to migrate probably to the JV. And that would affect I think our bookings to some degree, but I think we've contemplated that in our guidance. We've contemplated that in our projected growth rates for the business. And so it reflects that to some degree already.

Okay, terrific. Thanks, Charles.

You bet.

The next question comes from John Hodulik from UBS. Your line is open.

Great, thanks. Two quick ones, I think first of all, what's driving the higher MRR churn that you guys talked about for the second quarter, I don't know if it's the Verizon churn you referenced in a previous question. And are we sure that that's just a sort of a temporary move and not going to continue? And then, anything you could tell us about conversations with the other two rating agencies, and potentially any timing on moves on their part? Thanks.

Yes, I'll let Keith just take the second one. As it relates to the first we reported at the very low end of kind of our 2 to 2.5 with 2.1 this quarter, and I think really, the way to think about is just that we - deferral of churn is a good thing for us, right. And so we work hard to defer it or make it go away as best as we can and in this quarter, I think we saw some deferrals that we probably would have initially expected to come into this quarter. And so we'll always take that. But I do think it represents a bit of - a little bit of an uptick in the following quarter. But nothing structural there, I think yes, there is some of that is definitely from the Verizon assets, absolutely. And so, overtime I think that we feel comfortable with our 2 to 2.5 range. And, our objective would be to continue to really drive discipline in deal selection that over time, we'd hope to lower that range when the time is appropriate for us to do so.

Hey John, on the second question, as it relates to the rating agencies, no surprise to you on the heels of working with S&P with the upgrade. We're working with the other to rating agencies. I think continuing to have a strong strategic performance like we're having. Our leverage going down again, our commitment to use both debt and equity as we fund the business going forward and having a levered ratio of 3.6. No surprise to you both other rating agencies upgraded as one to one notch below investment grade with a positive outlook. So I remain meaningfully optimistic that we will get that second investment grade rating over the not too distant future. But again, it's not up to us to decide we're going to do all the things that we need to do as a business to make sure we put ourselves in good stead. And we're going to focus on getting that second rating. But again, we're doing as you would expect and working hard with the rating agencies to continue to share with them why we believe we should be investment grade.

Great. Thanks, guys.

The last question comes from Frank Louthan from Raymond James. Your line is open.

Great, thank you very much. A quick question about the JV, just the - sorry for the background noise. Quick question on the JV for two things. First, how important is that to have multiple partners they are you seeking multiple partners from the JV? And then, secondly, talking about the balance sheet and the leverage, how important is the JV structure to helping with the balance sheet?

Frank, I'll let - we can tag team this, one I'm glad to see your dog's excitement about our results.

Fired up.

But I think that the - I forgot your question.

Number of partners.

[indiscernible] came value to the call here.

No problem. I think that right now, we're really focused on getting this initial transaction done. We have talked about the fact that we could have multiple partners over time at the same time, we would be happy to embrace more comprehensively global partners where we can. There's some efficiency and effectiveness in doing that. So I think it will really depend on kind of where we land on this one and we'll evaluate each of the markets distinctly.

And as it relates to the second question, Frank, I think it's important to understand that part of the reason we really wanted to push it off balance sheet and have a more minority interest was to so we didn't consolidate. And although as we said earlier on, the return profile for Equinix and return on equity on an IRR basis is very, very attractive as it is also for our partner. We want to make sure that we can hold that that debt off the book. And so what will typically happen the rating agencies will look through into the JV structure and they'll allocate on a pro rata basis, the amount of leverage that sits in the JV to the parent company. Again, it's important for a couple reasons again. We care about our balance sheet and our core metrics. But the other part is having the JV in this partnership arrangement, as Charles alluded to, with one or potential more partners allows us to get capital back in, we get to recycle that capital, put it back into the business as appropriate. And then there's a fee stream associated with it. So it gives us the opportunity to continue to focus our cash and our energy on the retail business at the same time increasing strategic value by having it off balance sheet with our partners.

Okay, great. Thank you very much. I appreciate it.

Great. That concludes our Q1 call. Thank you for joining us.

That does conclude today's call. Thank you for participating. You may disconnect at this time.