Data center giant Equinix continues to expand as demand for its services shows no signs of slowing in the wake of the AI revolution.
The Redwood City, California-based company reported its second-quarter financial results on August 7, outlining its strategic focus on both traditional retail data center offerings and Hyperscale facilities.
Equinix reported revenue of $2.2 billion for the second quarter of 2024, up 8% year-over-year. The company is also optimistic about its future performance, raising its annual revenue forecast to $8.69 billion to $8.77 billion – an increase of around 7% from 2023.
A key driver of optimism about Equinix’s data centers is the potential of AI.
“Business transformation remains a critical priority for our customers, and the emergence of AI marks an inflection point for our industry,” said Equinix CEO Adaire Fox-Martin during his company’s quarterly earnings call. “AI, much like the growth of cloud technologies a decade ago, will take time to fully develop.”
As Demand for AI infrastructure services continues to grow stronglyAnalysts said Equinix is well positioned to consolidate its position due to its geographic scale and diversified service portfolio.
Expanding the xScale program to meet AI demand
Equinix is positioning itself to capture both the training and inference aspects of AI workloads.
“In the short term, demand for AI training workloads will increase significantly, particularly among service providers,” said Fox-Martin. “Our xScale program continues to benefit directly from this demand.”
Equinix’ xScale programwhich focuses on hyperscale data centers, was launched in Europe in 2017 and has since expanded to Asia and the US.
The company recently acquired land and power for its first multi-megawatt xScale campus in Atlanta. This expansion complements Equinix’s existing robust portfolio in Europe and Asia Pacific.
Last quarter, Equinix leased an additional 17 MW of capacity at its Silicon Valley 12 and Paris 13 facilities.
“This brings our global xScale leasing to 365 MW, representing a total contract value of nearly $6 billion and annual revenue of over $700 million once these assets are fully ramped up,” said Keith Taylor, CFO of Equinix.
Connection strategy and performance
xScale is not Equinix’s only growing business. The operator’s interconnection business continues to show strength, with over 472,000 connections deployed in total. Equinix reported that gross interconnection adds reached their highest level in two years and pricing trended positively.
“In absolute terms, our A-to-Z connections continue to grow, and we’ve seen that quarter over quarter,” Fox-Martin said. “It’s a clear way of defining unique relationships between companies in a metropolitan area, and I think that really speaks to the value of Equinix.”
Equinix also focuses on sustainability and innovation in its data center operations and is involved in initiatives such as submarine cable landing stations and next-generation mobile applications, which are part of its broader strategy to support digital transformation and connectivity.
During the Olympic Games in ParisEquinix’s PA10 data center, which opened in 2023, played a supporting role in heating some Olympic-sized swimming pools.
The Equinix PA10 facility in Paris (Image: Equinix)
Global expansion and market penetration
Equinix continues to expand its global data center presence. In May, Equinix opened its first data center in Johor, Malaysia. In June, the company announced the construction of a new data center in LisbonPortugal.
The following month, the company announced plans to enter the Philippine market by acquiring three data centers in Manila from Total Information Management.
“The combination of our strong leadership position at our Singapore hub and our market launches in Malaysia, Indonesia and the Philippines has put Equinix in a strategic position to help our customers capitalize on the growing digital opportunities in the fast-growing Southeast Asia region,” said Fox-Martin.
Analysts remain optimistic about Equinix’s growth
Equinix’s growth is part of a broader trend of increasing demand for data center capacity and services in 2024, driven in part by AI.
Last month, Moody’s reported that there is an increase in demand for data centers. In a REIT data center report also published by Moody’s in July, the financial ratings agency commented positively on the geographic mix of Equinix’s portfolio, including its development pipeline, its presence in retail colocation and interconnection.
The analyst firm IDC also sees a positive trend in Equinix’s strategy, especially in comparison to other companies in the data center sector.
“Equinix had a great quarter, outperforming first quarter 2024 growth and continuing to be a leader among its peers,” said Courtney Munroe, vice president of worldwide telecommunications research at IDC. Knowledge about data centers.
Munroe noted that Equinix increased its coverage during the quarter by expanding into multiple countries around the world and continues to invest in xScale facilities to meet hyperscale demand.
“They also have the most, which is a key driver of their performance, such as digital services such as bare metal and AI-enabled facilities and partnerships,” Munroe said. “Given the current challenging economic environment, their forecast for the remainder of 2024, if achieved, will be impressive but not unexpected.”
How does Equinix compare to other hyperscale operators?
According to a new report from Synergy Research, there are now over 1,000 large data centers operated by hyperscale companies. Equinix is also present there, but the numbers are a bit more nuanced.
John Dinsdale, chief analyst at Synergy Research Group, said Knowledge about data centers To understand Equinix’s position among hyperscale operators, one must look beyond the top-level financials in the earnings release.
“The revenue figures reported cover all of its retail colocation activities, but the company targets the wholesale side of the colocation market through a number of unconsolidated xScale joint ventures,” he said. “So Equinix’s financials will include a share of the profits from these joint ventures, but the joint venture revenues will not be included in Equinix’s revenue figures.”
Dinsdale noted that Equinix will typically own 20% of xScale joint ventures and will be responsible for building, operating, marketing, sales and supporting the data center. The partners will provide the majority of the financing and own 80% of the joint ventures.
Read more about the latest hyperscale data center news
As for customers, Dinsdale explained that these are Equinix data centers and they deal with the usual Equinix employees.
According to Synergy Research, Equinix is the clear leader in the retail colocation market, with a 21% global market share and is nearly four times the size of the next largest provider. Hyperscale operators are the largest customer group for Equinix, making it clearly the largest retail colocation provider for hyperscale operators.
Dinsdale explained that hyperscale operators use retail colocation facilities to accommodate cloud on-ramps, local points of presence, CDN or edge nodes, and smaller local cloud zones.
“Equinix is a relative newcomer to the wholesale market; xScale only launched in 2020 but has already established itself as one of the leading providers of wholesale facilities for hyperscale operators,” said Dinsdale.
