Equinix, Inc. (EQIX) Q4 2025 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Equinix Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Also, today's conference is being recorded. [Operator Instructions] I would now like to turn the call over to Phillip Konieczny, Senior Vice President of Finance. You may begin.

Good afternoon and welcome to our fourth quarter 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 may be affected by the risks we identified in today's press release as well as those identified in our filings with the SEC, including our most recent Form 10-K filed on February 11, 2026, and our most recent Form 10-Q. 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 our policy not to comment on its financial guidance during the quarter unless it is done through an explicit public disclosure. On today's conference call, we will provide non-GAAP measures. We provide a reconciliation of those measures to the most directly comparable GAAP measures in today's press release on the Equinix Investor 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. With us today are Adaire Fox-Martin, CEO and President; and Keith Taylor, Chief Financial Officer. At this time, I'll turn the call over to Adaire.

Thanks so much, Phillip. Hello, everyone, and a warm welcome to our call today. I'll start by saying on a personal level, how deeply pleased I am with our performance in 2025 and particularly in Q4. Demand for our solutions has never been higher, and our teams have stepped up exceptionally well to capitalize on it. To our employees around the world, I'd like to say a huge thank you for all you are doing to achieve our goals. I also want to thank our customers and partners for the trust they have placed in Equinix as we intensified our investment in growth, investment that is already paying off. Our bookings have accelerated dramatically. Our recurring revenue growth rate continues to climb, and we are managing our spend with great discipline. All of these factors are combining to fuel an expansion pipeline and growth in AFFO per share materially ahead of expectations. Given our momentum exiting 2025, our confidence in our 2026 plan has grown. This is reflected in both our revenue and our AFFO per share outlook. Our performance and our outlook demonstrate 2 things: The first is that Equinix is connecting the fastest-growing segments of technology infrastructure and the value of our platform is increasing with every connection. The second is that our execution continues to improve. This winning combination delivers superior customer outcomes and stronger shareholder returns. Not only are we on the right track, we're moving far faster along it. Now our momentum is clear across several key metrics. Monthly recurring revenue, the most powerful driver of long-term value creation grew 10% in Q4 and 8% for the full year on a normalized and constant currency basis. And for bookings, the leading indicator for revenue performance, the story is even stronger. We delivered annualized gross bookings of $1.6 billion in 2025, up 27% year-over-year. Our Q4 bookings were $474 million, up 42% year-over-year and 20% from Q3, well ahead of our plan. And we delivered record capacity to meet growing demand including 23,250 cabinets in our retail footprint and more than 90 megawatts in our xScale business in 2025. We delivered more than 30% of this retail capacity ahead of schedule, which we believe will accelerate our growth in '26 and beyond. Now Keith will go deeper into our metrics shortly, including recommendations on how to model the Hampton transaction. As you saw in our release, the expected timing of this transaction shifted from Q4 to Q1, which, as we have shared in the past, simply reflects the fluid nature of xScale lease signings. Before I turn the call over to Keith, I'd like to provide some additional perspective on why our business is performing so well. For starters, we are building on the strength of our fundamentally differentiated value proposition. Our decision to double down on the digital infrastructure and connectivity requirements of enterprise customers is fueling our success, particularly as they implement AI across their operations. In Q4, approximately 60% of our largest deals were driven by AI workloads. That's up from approximately 50% earlier this year, a trend line that we believe will continue as we are really only at the beginning of this journey. Equinix is the neutral ground, where enterprise infrastructure converges, and we provide the essential layer of connectivity that make it all work at scale to unlock real business value. This is a long-term tailwind for our business, particularly as AI inferencing expands across industries. With market-leading native cloud on-ramps, the largest global footprint across the most critical markets and the broadest enterprise customer base, we deliver what AI inference demands, network diversity, cloud proximity, AI-ready interconnection and low latency. These are structural advantages we have built over decades, and we believe they will continue to set us apart. In 2025, we completed over 17,200 transactions, up 6% year-over-year with over 6,100 unique customers. Our Q4 transaction volume was the highest ever at over 4,500 deals with more than 3,400 unique customers. We saw an uptick in volumes for all workload sizes from single cabinet requirements up to our largest cage configurations. And more than 60% of our existing customers added new services last year. Now let me share some recent customer wins and use cases that really showcase what's driving this demand. Salesforce chose Equinix to create a private multi-cloud networking layer for the engine inside their data and AI foundation. This is our largest global Fabric Cloud Router sale to date. By deploying Equinix Fabric Cloud Router across 14 countries and 21 metros, we are enabling private network connectivity between Salesforce's presence in AWS, Azure and other cloud service providers. Alembic, an AI-powered marketing analytics platform selected Equinix for the scale and consistency of our global operations and the richness of our interconnection ecosystem. We are working with Alembic as they deploy the NVIDIA DGX SuperPOD with NVIDIA Grace Blackwell systems to expand their addressable market through distributed AI. Signet, a leader in AI-powered workplace safety and operational intelligence, chose us because Equinix Fabric Security connects their edge devices, cloud providers and customer networks. This enables them to deliver real-time AI-driven quality control for industries ranging from food processing to manufacturing. Leading quantitative trading firm, Hudson River Trading, selected Equinix because our global footprint and our advanced cooling solutions enable them to achieve the latency and the density requirements they need to power their next-gen AI trading workloads. And Fortune 500 multinational, Honeywell Corporation expanded its relationship with Equinix because of the secure flexible solutions and global fabric connectivity we provide, including for key metros such as Shanghai, Tokyo and London. This is the first of many projects driving the integration of internal AI applications and the wider transformation at Honeywell. These are just some of the use cases underpinning our momentum. Our progress is a direct result of the changes we have made through our Serve Better, Solve Smarter and Build Bolder initiatives. Starting with Serve Better. Customers continues to secure both near-term and long-term capacity across our global platform. Our $474 million in annualized gross bookings in Q4 were supported by an incremental presales balance of $170 million with more than $60 million occurring in the quarter. Larger footprint requirements from enterprises and service providers contributed to this performance. Our pipeline is strong and we have already booked approximately 45% of our Q1 2026 target and signed an additional $100 million plus of presales as of today, already our largest presale quarter ever. As we accelerate growth, we are committed to a disciplined pricing strategy that's commensurate with both the strong and durable demand patterns we see and the differentiated value our solutions provide. This translates into our strong cash-on-cash return profile and the premium yields we secure. We continue to underwrite our newest projects with these principles in mind. With Solve Smarter, we are helping customers connect and simplify their infrastructure. Interconnection revenue grew 9% year-over-year on a normalized and constant currency basis. We added 7,800 net interconnections in the quarter, including our adjustments. We also crossed an extraordinary milestone in Q4, surpassing 0.5 million interconnections worldwide. To put this into context, that's more than double our nearest competitor. As AI amplifies the need for massive real-time data movement, Equinix is delivering the connectivity infrastructure that enterprises depend on the most. As part of our Build Bolder initiative, the work we are doing across our global development portfolio is strengthening our competitive advantage. In Q4, we delivered more than 12,000 cabinets to our retail business across key metros. Our development engine remains exceptionally active with 52 major projects underway across 35 markets, including 9 xScale projects. Since October, we have added 10 new expansion projects. We also closed on a number of strategic land acquisitions last year, adding approximately 1 gigawatt to our powered land under control balance. This positions us well to meet long-term demand from both enterprise and hyperscale customers. Our xScale business achieved a key milestone in recent weeks. In January, we contributed our Hampton asset to the Americas JV, an important first step towards deploying $15 billion of capital across major metros in the U.S. The Hampton facility will support approximately 240 megawatts of IT capacity when fully built out. The signing of the lease for half of this facility to a hyperscale customer is expected in Q1, and we expect the site to be fully leased later this year. In addition, we have established a healthy leasing pipeline, demonstrating the value of our xScale strategy. Of the approximate 3 gigawatts of capacity that can be developed, close to 1 gigawatt is currently earmarked for our xScale business. Further, our land acquisition pipeline continues to grow as we maintain our focus on major metro expansion opportunities where we are confident of significant long-term demand. As such, we expect xScale will continue to contribute to NRR over the next several years as we execute our strategy. Overall, we're winning where it matters most by connecting the infrastructure that powers the AI build-out happening across industries. And we are laser-focused on expanding our category leadership through disciplined execution that drives healthy revenue growth, margin expansion and superior shareholder returns. I'll now turn it over to Keith to take a closer look at the numbers behind the quarter and our outlook.

Thanks, Adaire, and a very good afternoon to everyone. First and foremost, I'll start by briefly building on Adaire's comments. Simply, it was an outstanding close to 2025. From my perspective, Equinix delivered its best quarter ever. By far, closing the last quarter of the year with over $470 million of annualized gross bookings and more than $60 million of presales activity, well ahead of our expectations and certainly any prior quarter. The magnitude of our quarterly activity both across a substantial number of diverse deals, but also with over 3,400 customers underscores that our strategy is working and meeting the opportunity in front of us. Also, I'd say that it's our retail business that's the standout, delivering record bookings across each of our small, medium and large size of deal categories. And alongside our strong sales execution, the teams continue to operate the business with great focus and discipline, and we're only getting started. This created better-than-expected margins. We raised our capital more efficiently than planned and invested or utilized the cash more effectively, creating better-than-planned cash flows. Suffice it to say, our performance is creating momentum in the business to drive attractive recurring revenue growth and the scaling of healthy AFFO per share performance. Now I'll cover some of the highlights for the quarter as depicted on Slide 7. Note all growth rates in this section are on a normalized and constant currency basis. First, as we indicated last quarter, our Q4 guide assumed the execution of a large xScale lease for 2 of the 4 buildings on the Hampton campus. As Adaire noted, this transaction is now expected to close in the first quarter. We also had some onetime planned benefits, which will not repeat themselves in Q1. That being said, our fundamental underlying performance was meaningfully better than our expectations from top to bottom. Please refer to Slide 15 that bridges our quarterly revenues from Q4 2025 to Q1 2026. Now let me move specifically to revenues. Q4 revenues were $2.4 billion, up 7% over the same quarter last year, fueled by continued strength in our monthly recurring revenues, which was up 10% over last year and as you likely noted, a steady quarterly improvement throughout 2025. Q4 revenues, net of our FX hedges, included an $8 million currency headwind when compared to our prior guidance rates. Global Q4 MRR churn was 2.2% lower than planned. And for the full year, our average quarterly MRR churn was 2.4%. Looking forward, our teams remain highly focused on reducing MRR churn, which includes the development of AI predictive tools to help identify opportunities to eliminate or defer any MRR churn. Global Q4 adjusted EBITDA was $1.2 billion or approximately 49% of revenues, up 15% over the same quarter last year. Q4 adjusted EBITDA, net of our FX hedges included a $4 million FX headwind when compared to our prior guidance rates. Our 2025 margin improvements reflect our continued focus on delivering higher operating leverage across the business while also investing in growth. As it relates to 2026, we expect to continue to deliver improved adjusted EBITDA margins while also absorbing both accelerated and increased expansion drag, the byproduct from our growth investments. Global Q4 AFFO was $877 million or up 13% over the same quarter last year, including the seasonally higher recurring CapEx spend. Q4 AFFO included a $2 million FX headwind when compared to our prior guidance rates. And our nonfinancial metrics continue to demonstrate strong momentum across our core or key metrics of net interconnection additions, net new cabinets billing and MRR per cabinet pricing. Our net interconnection additions increased by 7,800, including both physical and virtual connections and also include our adjustments. As Adaire highlighted, we've now surpassed the 0.5 million interconnection milestone across our ecosystem, an unmatched competitive advantage, which has been curated over 25 years of history. Turning to our cabinets billing. We added 4,300 net cabinets billing in the quarter, including cabinets from our Main One portfolio. Our underlying net cabinets billing increased by the highest level in 3 years, driven by strong bookings performance across each of our 3 regions. Our backlog of cabinets, sold but not yet installed, stands at a record given the bookings performance, especially in the second half of 2025. And finally, we continue to drive attractive MRR per cabinet yields, stepping up $65 quarter-over-quarter on a normalized and constant currency basis, driven by very favorable pricing backdrop, increasing power density and strong interconnection attach rates. Turning to our capital structure. Please refer to Slide 10. As of year-end, our balance sheet increased to approximately $40 billion, including cash and short-term investments, totaling about $3.2 billion. Our net leverage was 3.8x our annualized adjusted EBITDA. During the quarter, we issued $1.8 billion of senior notes at an effective rate of about 3.2%. Throughout 2025, our diversified capital raising program allowed us to raise debt at very attractive rates, which helped us optimize our 2025 net interest expense. Looking at 2026, we plan to continue to raise debt in lower-cost locations, either directly or synthetically including Canada, Singapore and Europe. And now looking at our capital expenditures for the quarter. Please refer to Slide 11. Capital expenditures were approximately $1.4 billion, including our planned seasonally higher recurring CapEx of about $140 million. We opened 16 major projects across 14 markets since our last earnings call, adding important retail capacity to several of our key undersupplied metros. And we announced 10 new projects, which will be added to our global portfolio over the next few years. Revenues from owned assets are 70% of our recurring revenues. Our capital investments delivered strong returns as shown on Slide 12. Related to our now 187 stabilized assets, revenues increased by 6% year-over-year on a constant currency basis. These stabilized assets are collectively 82% utilized and generated a 27% cash-on-cash return on the gross PP&E invested on a constant currency basis. Now given our strong underlying Q4 results, our 2026 outlook is expected to be meaningfully ahead of our expectations that we shared with you at our June 2025 Analyst Day. Our strong pricing discipline, coupled with our best-in-class capital allocation efforts should allow us to generate industry-leading durable cash flows with attractive cash yields, thereby delivering revenue growth and long-term value for our shareholders. Please refer to Slides 13 through 17 of our summary of 2026 guidance and bridges. Do note all growth rates are on a normalized and constant currency basis. Starting with revenues. For the full year 2026, we expect total revenues to grow between 9% and 10%, which includes a modest 40 bps attributed to the NRR from the xScale lease timing. We expect our monthly recurring revenues to grow between 8% and 10%, driven by strong 2025 bookings performance, including presales momentum. MRR churn is anticipated to remain comfortably within our targeted range of 2% to 2.5% per quarter. We expect 2026 adjusted EBITDA margins to be approximately 51%, an expected 200 basis point improvement over 2025, reflecting anticipated revenue growth and focused expense management. 2026 AFFO is expected to grow between 9% and 11% compared to the previous year. AFFO per share is expected to grow between 8% and 10%, which after adjusting for 100 basis points of xScale lease timing is 300 basis points higher at midpoint relative to our prior expectations from past summer. 2026 CapEx is anticipated to range between $3.7 billion and $4.2 billion including about $280 million of recurring CapEx spend. We have not included any on-balance sheet xScale spend as we do expect to be reimbursed for these costs as we transfer these assets into the xScale JVs. And finally, we expect our quarterly cash dividend increase by 10% over 2025 on a per share basis. As a result, our total 2026 cash dividends paid will approximate $2 billion. So let me stop here. I'll turn the call back to Adaire.

Thanks very much, Keith. As this is my first opportunity to address all of you since Keith's retirement announcement, I wanted to take a moment to acknowledge his tremendous impact on Equinix over the past 27 years. His leadership has been integral to our success and has helped us lay the foundation for our future. I am particularly grateful for Keith's partnership since I joined the company, and I look forward to his continued support as a special adviser over the next year. Our process for selecting Keith's successor is well underway and we look forward to updating you when we have news to share. Before we turn to questions, I want to leave you with a final thought. Equinix is at the center of a historic multiyear infrastructure investment cycle. To deploy AI at scale, enterprises need to connect and manage increasingly complex and distributed technology ecosystems. Equinix is the neutral connector that unlocks business value for our customers. It is what we do best. It is where we have continued to focus and our focus is paying off. We were built for this moment, but execution is everything. And we will continue to prioritize doing the most important things exceptionally well, so that we delight our customers whilst delivering structurally higher returns and AFFO per share growth for our shareholders. That's exactly what we did last quarter, and it's what you should expect from us going forward. So with that, let's open the line for questions.

[Operator Instructions] Our first question comes from Eric Luebchow with Wells Fargo.

Adaire, maybe you could touch a little bit on kind of the bookings momentum that you talked about that came through in Q4, and it sounds like you're off to a really good start in Q1. I think you said 60% plus of the largest deal came from AI workloads. Are you seeing more of these kind of coming from traditional enterprise companies adopting AI? Is it coming more from the hyperscalers putting edge nodes in your facility? And as you kind of look out, do you think that 60% is going to continue to rise throughout the course of the year?

Thanks very much for the question, Eric. Let me perhaps unpack a little of that AI 60% stat for you. I think the value that we provide is obviously something that's been amplified, thanks to the continued investment in this sector overall and the excitement around it. I think for us, the breadth and scale of our product continuum, they're very -- it's very uniquely aligned to meet this demand. And as I mentioned in my prepared remarks, and you just repeated there, 60% of our largest deals were driven by AI workloads. Now during the course of the quarter, when I look at that 60% related to AI, interestingly enough, nearly half of them were deployed by non-cloud and IT companies but they were deployed by companies in the retail, e-commerce, manufacturing, financial services and content sector. So I think this demonstrates increasing enterprise AI adoption outside of the service provider community. We also had 11 liquid cool deployments in Q4, 5 of which were in our New York City facilities underpinning the requirements of our SSI customers to support elements -- use cases like algorithm training in that sector. So I think this also demonstrates continuing strong diversity. And from an interconnection lens, we see a very healthy growth in the AI service provider ecosystem, although it's still early days, given, I think, the breadth and depth of our established ecosystem density. So interesting to see that it was -- of the 60%, 50% driven by non-cloud and IT providers, really demonstrating the growth in enterprise application of AI processes to business. And we see this as a continued positive tailwind for our company.

Our next question comes from Jonathan Atkin with RBC.

I was interested if there was any update to your multiyear guidance provided at the Capital Markets Day last June. And are those targets still relevant? Or should we be thinking about 9% as being the new baseline for AFFO per share growth?

Jon, look, first and foremost, thank you very much for the question. I think what's most important is to understand just the underlying momentum of the business. As Adaire highlighted both in her prepared remarks and certainly in the commentary around our booking activity, the business is performing well. We sort of said and we've said it over the last 2 quarters, and we're sort of -- we'll talk about it this quarter, it's the execution on the top line is the management of the cost as well as efficiently raising capital and deploying it appropriately. And so I think we're on the right trajectory. We're delighted with what we've delivered for 2026. I just feel it's a little premature to talk about '27 and beyond. But as you can appreciate, the momentum is wind at our back. And I would add to that, I think currencies are going to continue to be wind at our back as an organization. So the combination of really strong performance, the ability to maybe invest faster than we were anticipating, as Raouf sort of bringing forward as many of the assets as possible. I just think we're in a really good spot. And I think it's just a bit early to talk about '27 and beyond. But I know you can do math very, very well. And so I'm going to leave it to you to sort of interpret both how we're performing this quarter being Q1 '26 and what that really implies exiting 2026. So again, feel good about our position, but let's defer the '27 discussion until later.

Our next caller is Aryeh Klein with BMO Capital Markets.

First, I guess, Keith, congrats on your career and wishing you the best moving forward. I guess, Adaire, just going back to the previous question around AI in that 50%. Do those deals look differently than -- different than some of your more traditional deals, be it from a size or location standpoint? And then, I guess, from an underlying demand standpoint, it seems like things have meaningfully accelerated since the Investor Day back in June. Can you just unpack that? What specifically has, I guess, driven that acceleration momentum?

Yes. So let me comment perhaps on that accelerated momentum first, and then I'll address the second part of your question, which is around the characteristics of some of those AI deals that we saw in the first quarter. I think when I look at the gross booking outcome that we saw in Q4, in fact, it was an acceleration from Q3 all the way through to Q4, very much across the second half of the year. And as we've mentioned, in Q1, we already see some early acceleration in the current quarter. So when I look at the characteristics of what is driving that, I think it's, in large part, 2 very specific but very different themes. The first is the external one, and I'll speak to that in a moment, and the second is the internal one. So if I think about the external one, we're seeing robust demand right across all workload types. And what was extremely interesting about the demand profile more generally across our Q4 performance was that it was right across the different segments that we serve. We saw all segments and all verticals grow. So it was a very robust, broad-based demand across numerous different types of workloads. We, of course, saw specificity around AI opportunity where there was connectivity requirements for near -- metro connectivity requirements or connectivity requirements to unlock the value in that process. So very robust demand across workloads, across all industries, across all regions and across all of the segments that we serve. Then there is the internal piece, which is the execution of the team against this particular opportunity that we saw in the market. First of all, we did accelerate some capacity into the year. And that was a helpful element in terms of our output and our performance. But we also had a phenomenal pipeline conversion rate. So the team converted at around 49% in Q4 which speaks, I think, to the quality of the pipeline that we had coming into the quarter. And as I've mentioned previously, we've been putting a lot of focus on ensuring that we're forecasting the future pipeline with the same intensity that we're forecasting the current booking pipeline and really building our footprint strongly as we enter each quarter so that we know that we're executing on very highly qualified opportunities. Interestingly, it was also great to see some very firm pricing right across all of those segments and across all of those regions in Q4. So great disciplined internal execution that kind of met the market moment where the market was at. And as it relates to the characteristics of the transactions that set in that 60% contingent, it was, of course, some of our larger transactions were related to our AI opportunity. And I think one characteristic of all of them, I've shared with you some of the use cases already across the different segments that we facilitated this functionality into, but one characteristic was that we saw a 33% increase in density compared to the non-AI deals. So an average of about 10 kVA per cab for these transactions.

Our next question comes from Michael Rollins with Citi.

Keith, I also want to extend my congratulations and best wishes on your upcoming retirement. Maybe going back to some of the comments from earlier in the call, Keith, I think you were discussing the opportunity to improve churn. And curious, as you're preparing these new tools to help get that churn down, how much of this is in the company's control versus how much of it is just simply customer optimization of workloads that the churn will happen irrespective of how Equinix tries to get in front of it? And then just a secondary clarification on the 6% stabilized revenue growth, can you unpack that a little bit in terms of what's delivering that incremental strength relative to the recent history?

Yes, Mike, this is Adaire. I might take the churn question, and then Keith answer the question around the 6% stabilized growth for you. Let me unpack the churn commentary. So over the course of the past 2 quarters, we saw that our churn has set more at the lower end of the range that we guide to than at the higher end. This is a combination of access to data and unpacking the data, the tool that we're working on and have some early pilots in place that Keith alluded to in his prepared remarks, the fact that we identify much earlier in the process, what we call ATR or available to renew. So much earlier in the process, the cohort of our customers that sit in that ATR category and then being able to deploy our customer success team onto that ATR cohort of customers in order to make phone calls much earlier in the process than we've been doing in the past and to facilitate not just a renewal, but even potentially an upsell opportunity. One of the things that we saw in Q4 was that 60% of our existing customers added additional services from Equinix to their portfolio. And every time you have a call with the customer, you have an opportunity to share what we're doing around new services. So I think it's the combination of those elements, ATR, telemetry and visibility into our data, the customer success team focused on this and tools that help us predict more accurately. There is, of course, as you quite rightly point out, a proportion of churn that is not addressable by us. And that is now something that we have visibility into, and it means we focus our resources, our efforts on the proportion where we can actually address an outcome for the customer and for the business.

Michael, first, thank you for the nice comment. I appreciate it. To respond to the question on stabilized assets and the growth rate, the beauty of what we shared, number one is that there's more and more volume going through basically the stabilized assets that isn't necessarily cabinet related because our utilization is 82%. So that's number one. Number two, you got higher density per average cabinet. And so that's working in our favor. And number three, which I think is really important and then also sort of refers back to one of the comments I made in my prepared remarks, where we have some one-off benefits that don't necessarily repeat themselves at least quarter-over-quarter. And that's basically price increases, price increases relating to the fourth quarter. And so it's a combination of all those that really delivered a strong stabilized growth rate on an asset base that's really quite substantial. And so we feel very good about what we delivered. I probably would say, though, and to try and give you some steer, if you will, as you look forward, we still generally feel good about the stabilized assets growing 3% to 5%. That's the typical range. We are going to have these periods where we're slightly higher and sometimes we might be a little bit lower just based on the timing. But overall, we feel really good about the 3% to 5% growth rate attributed to stabilized assets.

Our next caller is Frank Louthan with Raymond James.

So part of your footprint expansion was to be able to capture some of the increased power demand from enterprises and we've definitely seen the demand ramp up. So where are you today with regards to your ability to offer -- to meet that customer demand for folks needing incrementally new levels of power from enterprises? Have you caught back up on that? Where are you in that process?

I'll answer that for you. Thanks for the question, Frank. So obviously, power and the sourcing of power is a very significant factor for us as a data center operator. Having power means that we're able to secure the compute and energy future of our customers. As we indicated, we currently have 3 gigawatts of developable land under control, and it's not developable land, full stop. It is powered land or land that we are close to securing the power on. So I guess we're not in the business of surreptitiously buying a block land if we're not sure that we can power that asset. And so that means that as we look at our capacity and our build profile moving out, we are building against powered land portfolios, which, therefore, will enable us to continue to advance and evolve our footprints and our facilities to meet the density requirements of our customers. As I mentioned, we saw already in the AI workloads that we enjoyed in Q4 being 33% more dense than non-AI workloads, and we can certainly see that density increasing across our footprint. So we believe that we're very well positioned to address those requirements of our customers.

And Frank, maybe just adding on to what Adaire said because I think it's important is we have 52 projects currently underway. They're energized projects. And that -- and I'm talking about generally the retail space. And as we shared with you at Analyst Day, whether you look at a DC17 or our new Dallas build, they're coming with scale and size, but they're not so big that maybe there's excess focus on it. And so I feel really good. We talked about the 167 megawatts. And so it gives you a sense that we're building capacity in markets where there's a sort of broad need for that capacity, and they're the important markets, the Chicago, the New York, the Dallas, the Washington and you go around the world and think about all those critical markets and that we're trying as hard as we can to build out on that capacity. And so with the 52 projects currently underway, it sort of just -- it adds to what Adaire is saying that we have the current opportunity and then we also are creating the future opportunity for ourselves as well.

Our next caller is Michael Funk with Bank of America.

Keith, first, congratulations, and thank you again for all the help over the years. So in prepared remarks, you mentioned a disciplined pricing strategy. Keith, just curious kind of the magnitude of how much higher you can take pricing? And then you mentioned a minute ago, the 3% to 5% projected range for growth with some variance. Can you add any more comments around what would cause the variance, whether it's seasonality, timing? And maybe a final part of my question would be, are you seeing ability to change contract terms on renewal, whether that's increased escalators or other factors?

Okay. I'll take the question, and Keith can add some components to it as needed. As I mentioned, we experienced very firm pricing throughout Q4 across all segments and for all regions. And we're very disciplined around the approvals and the approach that we take with our customers, because we recognize that in the platform that is Equinix, there is a range of differentiated value that allows us to accelerate the pricing opportunity. Our pricing commanding yields as a result of our interconnection density as a result of our cloud on-ramps and of course, the metro locations, which becomes even more important when we look in a low latency world around certain applications of AI workloads. So I think from a pricing perspective, we're very disciplined. We're very focused on that, and we know that we have opportunity to accelerate that in that regard. The vast majority of our contracts auto-renew, and they renew with a particular pricing increment applied to them. But this is also an opportunity for us to have a conversation with our customers. And that's why the ATR program is an extremely important one for us because it does allow us to look at customer usage, not just of the space and power within our footprint, but some of the additional and incremental services that Equinix offers and then allows us to enjoy the price point that those services represent in terms of value for our customers.

Our next caller is David Guarino with Green Street.

Your stabilized cash gross profit growth has been excellent all year, in 2025. And part of that, I know was due to shrinking expenses. So wondering do you think that trend of reducing cost will continue or at some point, are you going to have to increase staffing levels if this outsized pace of bookings continues?

David, let me take that one. Adaire, jump in as needed. So one of the comments we made is that we're just getting started. I think when you step back and look at the organization, we're driving the top line. Raouf and his organization is doing a great job of managing the IV access to the gross profit line and then you have the rest of the organization. And today, for round numbers, you're 18%, 19% SG&A as a percent of revenue, right? We have a stated goal that we really would like to get -- we'd like to improve that. And that's through bending the cost curve. It's not necessary -- it's not always about eliminating costs, it's bending the cost curve and becoming more efficient. So our goal is to get to 15% over some period of time. And so the combination of managing into the different markets and also managing the spend while also investing behind Harmeen and her efforts, I guess, to create efficiency in our organization through processes, through systems, through tooling, it's a combination of all these things that I think can make a difference over the years. And still early, but we're offering up this year a guide of roughly 200 basis points of improvement. It's coming from the top line, it's coming certainly from Raouf's organization, and we're still investing in the business to develop future opportunity for us. So I'm not necessarily sort of subscribing to what you said that we need to throw more bodies at it. We tend to be a little bit more headcount dense than almost anybody else out in the marketplace. And I would argue that we get more leverage from that as we introduce more assets into our environment. You don't -- if you build another -- put up another building in Dallas, as an example, you don't need to necessarily go hire more SG&A to support that asset. And so I feel very comfortable that when you look out that we can become an increasingly more efficient business. And consistent with the comments we made at Analyst Day that we're certainly on a nice trajectory, but we said 52% plus. And there's a very good reason why we put the plus at the end of the 52%. So it's a journey that we're going to be on together, and I'm excited.

Our next caller is Michael Elias with TD Cowen.

Congrats on the results. Question for you regarding the bookings. Obviously, great to see big bookings quarter in 4Q. What I'd like to get a sense of is, how would you rank order the contribution to the bookings from the cabinets that you have coming online in capacity-constrained markets, obviously, brought on cabs in NOVA as well as Frankfurt, both of which we're capacity constrained versus it being a structural acceleration in demand. And really, what I'm trying to get at is how sustainable is the 4Q bookings level because that obviously has implications for forward revenue growth?

Okay. Michael, I'll have a stab at the question and then Keith can jump in if I -- if we need additional clarification on a couple of points. I guess, over the course of the last year, we began to show our annualized gross bookings to you as a metric. And the reason for doing that was to give you with the combination of the presales number to give you a sense of the momentum that we see inside the business in any given quarter. And since we've done that, we've seen our annualized gross bookings moving upwards every quarter. And certainly, Q4 was no exception to that particular outcome. We have a very strong pipeline going into Q1. We've already closed 45% of our Q1 target. And we've had a meaningful presales experience in Q1 to date that has given us our largest presell quarter even though we're just halfway through. So I think looking forward, our bookings growth will continue to be a very strong indicator of underlying health. I think the best line or best fit is up and to the right, but that's where we see the demand. But obviously, there will be some variability quarter-to-quarter as seasonality and other elements kick in. So that's something that we will manage as we look at it on a quarterly basis. Then as it relates to the cabinets, Keith, do you want a piece?

Yes. Michael, I'll just add a little bit to what Adaire said as well. I think our expansion tracking sheet gives all the people on the call a pretty good sense of where we're making our investments. We need more capacity, and we're going to continue to invest more capacity. And as Adaire alluded to, we have roughly 3 gigawatts that we're considering over a period of time, while we're still building currently. I think the combination of continuing to make the current investments while thinking longer term, while at the same time, demand shaping to markets. And you've always heard us talk about the right customer with the right application going into the right data center, and that will continue to hold true. But particularly in markets where they're constrained, not just for us but for the industry, we feel that we can demand shape that opportunity into other markets that are proximate or within the fiber route sort of environment that would make it suitable for our customer to consume. And so I would just say that there's a lot of things that are going into it, different markets are going to have different sets of circumstances. But this is what we're focusing on as an organization, not only increasing the density, but making sure that we demand shape to the right markets in support of the customers' needs. And that also plays in a little bit to the pricing as well. So hopefully, that gives you a bit of a sense that, yes, we understand that some markets are more constrained than others, but we're also going to build in adjacencies such that we can maybe continue to enjoy the opportunity that's in the marketplace.

Our next caller is Nick Del Deo with MoffettNathanson.

Keith, congratulations on your upcoming retirement, and thanks for all your help over the years. Adaire, earlier in the call, you noted the strength in the interconnection franchise. Some of the big cloud service providers that you work with have announced and are developing products to help customers go to multi-cloud route. I was wondering if you could talk a bit about the puts and takes of those efforts as it relates to your interconnection franchise?

Thank you for the question. I guess at Equinix, we have always understood and always appreciated the importance of the network. And I think some of the announcements that we've seen around connectivity is a validation of connectivity and the importance of the network as part of the broader AI ecosystem and landscape. And of course, we have continued to invest in our network products, in our interconnection product portfolio, and it is a significant part of our footprint and a significant part of our global revenue. We recognize that many of the clouds have made a cloud-to-cloud connectivity announcement. But this is a very simple use case. Cloud to cloud is a simple connectivity use case. In reality, the reality of our customers is much more complex than this. We've always believed in a multi-cloud hybrid world. And that requires a much more complex consideration around connectivity and networking strategies for our customers. And the interesting element for us, of course, is that for many of these clouds, they are very valued partners of Equinix and they use a large part of our infrastructure to help create their value proposition in terms of networking positions and network PoPs. Now we're always evaluating our strategy here and always looking at what is emerging around the ecosystem. And that's why for us, we recognize the inherent value of our interconnection franchise. The role of fabric continues to evolve within that franchise as we see provisioned VC capacity stepping up quarter-over-quarter. And we have a range of very exciting developments around our footprint here, our product footprint here and developments that will simplify the networking journey for our customers, developments that will support MCP as it relates to the augmentation of AI agents and AI workloads and development that will really enhance the observability -- sorry, I'm stumbling over that word, that our customers enjoy on our network. So a lot happening in this space for us but we really see that many of the announcements really validate the role that the network plays in any AI ecosystem and is really, I think, a validation of the connectivity opportunity that we see ahead of us and is one of the reasons why we've continued to invest in this space.

Our last question comes from Cameron McVeigh with Morgan Stanley.

I just wanted to echo my congratulations to Keith. And secondly, you've spoken in the past about the shift from AI training to AI inference workloads. And curious if you have any updated views on the timing you've seen? And then secondly, this may be a follow-up to the last question, but just how important interconnection offerings are to drawing AI inference workloads from enterprises?

On the first part of your question, I think when you look at how our deal profile has moved through the course of '25 into '26, an uptick of 50% to 60%, we can see this tailwind of opportunities perhaps emerging earlier as an enterprise footprint than we originally thought when we presented in summer of last year. And so I think that's a really good news because it is taking the promise of AI and putting it into the hands of consumers, of citizens and customers all the way around the world. And as it relates to the role of interconnection in AI workloads, I think there's a very significant element here for us to consider. And in some ways, the Salesforce example that I shared in prepared remarks is a really great example of where our connectivity capability was able to provide a very unique service to Salesforce around creating private network connectivity. And so we're very excited about the opportunity to serve our customers' evolving needs, needs in a complex hybrid multi-cloud world. We think it's a very fast-growing space. We think it's something that would be additive to our colo capabilities because it will broaden the range of customers and that it will continue to strengthen our platform and our ecosystem. So this is something, as I've mentioned before, that we're very excited about the opportunity and see that we have a very strong competitive differentiation when it relates to others in the segment with this interconnection footprint.

Okay. Great. Well, thanks, everybody, for joining our conference call today, and have a great afternoon.

Thank you all.

Goodbye. And this concludes today's conference. Thank you for participating. You may disconnect at this time, and have a great rest of your day.