Equinix today held its 2021 Analyst Day where the company detailed a number of key business themes including its perspective on the data center total addressable market, importance of cloud on-ramps, geographic expansion possibilities, and its xScale joint venture to build hyperscale facilities. Below we provide a summary of the key takeaways from Equinix’s 2021 Analyst Day.

Equinix Data Center Portfolio – Analyst Day 2021

Equinix operates 229 data centers across 63 metros in 26 countries globally. Overall, these facilities host 317.9k cabinets, of which 248.9k are billed, equating to a 78% utilization rate.

From Q1 2021 to Q2 2022, Equinix expects to add 27.0k+ retail cabinets and ~70 megawatts of xScale capacity. As a reference point, Equinix had ~11k cabinet equivalents in backlog as of Q1 2021.

Overall, the company is focused on adding this capacity in 16 key markets including Silicon Valley, Dallas, Chicago, Washington, D.C., New York, São Paulo, Miami, London, Amsterdam, Paris, Frankfurt, Tokyo, Osaka, Singapore, Hong Kong, and Sydney.

Equinix Global Data Center Portfolio Analyst Day 2021
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Equinix Historical Revenue and Acquisition Growth

Since 2016, Equinix has grown its revenue, both organically and through M&A, from $3.6bn to a projected $6.6bn for 2021E. Indeed, this equates to a 13% compound annual growth rate (CAGR). Most recently, Equinix’s acquisitions have included data centers from GPX Global Systems (India), Bell (Canada), and Axtel SAB (Mexico).

Equinix Historical Revenue and Acquisition Growth
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During Equinix’s 2021 Analyst Day, the company provided guidance for future revenue growth, excluding M&A, of 7% to 9% per year, from 2021 to 2025.

Data Center Total Addressable Market (TAM) – Analyst Day 2021

From an organic growth perspective, Equinix highlights five data center sub-segments which each have different growth rates and addressable markets. Notably, the company highlights “as a service” as being the sub-segment with the highest growth rate, the largest total addressable market, but the lowest addressability for Equinix.

Data Center Total Addressable Market (TAM)

“As a service” and Private Cloud

At its Analyst Day, Equinix gave a summary of a number of inroads it has made in what is an untapped “as a service” opportunity:

  • Equinix Fabric: exceeds $100m of annual recurring revenue
  • Network Edge: deployments in 15 metros and expects to reach 25+ metros by the end of 2021
  • Equinix Metal: deployments in 18+ metros

In turn, these services make Equinix’s deployment of private cloud infrastructure more straightforward.

Hyperscale, Interconnection, and Retail Colocation

At its Analyst Day, Equinix also highlighted key themes for hyperscale, interconnection, and retail colocation, with the takeaways below:

Equinix Cloud On-Ramps by Metro – Analyst Day 2021

Equinix has a competitive advantage in winning cloud on-ramps from the six largest cloud service providers. These include Amazon Web Services (AWS), Microsoft Azure, Google Cloud, IBM Cloud, Oracle Cloud Infrastructure, and Alibaba Cloud. Specifically, Equinix has a 40%+ market share of hyperscale cloud edge nodes being deployed at the company, within its operating markets.

As of Q1 2021, Equinix has 175 cloud on-ramps and 43k interconnections to hyperscale customers. Additionally, during Q1 2021, Equinix’s retail business generated $900m+ of annualized recurring revenue from hyperscale customers for these highly-interconnected deployments.

Overall, Equinix offers 2+ cloud on-ramps in 31 metros globally, including 8 of the top 10 global metros by GDP. Also, the company has at least 1 cloud on-ramp from a major cloud service provider in 40 of its metros around the world.

Equinix Cloud On-Ramps by Metro Analyst Day 2021
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Equinix Geographic Expansion Possibilities – Analyst Day 2021

Since 2017, Equinix has expanded into four new markets including Mexico, Oman, South Korea, and India. Aligning with one of its themes, being global expansion, Equinix identified 14 additional markets at its Analyst Day which are “under review” for Equinix to expand into – in summary, emerging markets growth is a key takeaway from the company’s plans.

Specifically, these markets are Chile, Belgium, Denmark, Austria, Ghana, Nigeria, Kenya, South Africa, Thailand, Malaysia, the Philippines, Indonesia, Hyderabad (India), and Chennai (India).

Equinix Geographic Expansion Possibilities Analyst Day 2021

Equinix xScale Joint Venture – Current Progress

Once fully built-out, Equinix’s xScale data center joint venture with GIC will comprise 32 facilities globally, which will provide 600+ megawatts of power capacity.

To-date, the company has been engaged with 12 hyperscale customers, to whom it has leased 109 megawatts of power capacity. Compared to its current capacity under development of 172 megawatts, this equates to pre-leasing of 63% of its pipeline. Notably, all of the open xScale facilities (e.g., London and Paris) have had their power capacity fully leased.

In particular, xScale has had success by being adjacent to the existing cloud on-ramp nodes of hyperscale customers at Equinix. In other words, Equinix is benefitting from hyperscale customers placing their core deployments proximate to their existing access point footprints.

Equinix xScale Summary, Facility Size and Leased MW
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Equinix xScale Joint Venture – Future Ambitions – Analyst Day 2021

At Equinix’s 2021 Analyst Day, the company provided additional takeaways on the full potential of its xScale program, which will include additional joint ventures and a new partner that will be announced soon. Specifically, the company now anticipates xScale spanning 17 to 20 markets and 30 to 45 projects. Indeed, this translates into 530 to 1,000 megawatts of power capacity and $5.0bn to $10.0bn of total capital expenditures.

With Equinix’s 20% equity contribution and ~50% leverage utilization, this implies an Equinix equity investment of $0.5bn to $1.0bn. In turn, the company projects it will generate investment returns of 12% to 17% on this capital.

Strategically, Equinix is focusing its xScale efforts primarily in markets where the company has already established cloud on-ramps, in order to capture the benefits of the cloud ecosystem.

Current and Planned xScale Builds

Equinix Current and Planned xScale Builds Analyst Day 2021
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Finally, during its Analyst Day, Equinix provided a summary of three European markets that are benefitting from the hyperscale growth themes, which are accelerating its xScale program.

Paris – Case Study

In Paris, Equinix has experienced strong demand ahead of Paris’ upcoming 2024 Summer Olympics. With its operational campuses, Equinix is supporting hyperscale customers seeking to add core deployments to their existing access point footprints across the company’s Saint Denis and Pantin campuses.

As a result, both Equinix’s PA8x and PA9x facilities are 100% leased (see table above). In turn, Equinix recently announced that it plans to develop two more xScale data centers in Paris.

Dublin – Case Study

In Dublin, power is a constraining market factor to development. Therefore, Equinix intends to support its hyperscale customers at its future DB5x campus, which it expects to add to one of its joint ventures during 2021.

In Q1 2021, Equinix 100% pre-leased the first 19-megawatt building on its DB5x campus (see table above). Moreover, the company has interest for the remaining two buildings on the campus from hyperscale customers.

Frankfurt – Case Study

As of Q1 2021, Equinix’s interconnection ecosystem in Frankfurt encompasses 1.0k+ customers, 24.0k+ cross connects, and 280+ networks. Importantly, the company is also making progress in Frankfurt in what it refers to as its “Digital Infrastructure Services”. Specifically, as of Q1 2021, Equinix has deployed 170+ Equinix Metal servers, 30+ Network Edge instances, and 2.0k+ Virtual Connections.

In Frankfurt, through its xScale joint venture, Equinix expects to add 100 megawatts of power capacity and 4 to 8 hyperscale customers by 2025.

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