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 like to turn the call over to Katrina Rymill, Vice President of Investor Relations. Thank you.

Good afternoon, and welcome to today's conference call. Before we get started, I'd like to remind everyone that some of the statements 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 risks we 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 21, 2020. 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's Equinix's policy not to comment on its financial guidance during the quarter, unless it is done through an explicit 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'd 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'll be taking questions from sell-side analysts. In the interest of wrapping this call within an hour, we'd like to ask these analysts to limit any follow-on questions to just one. At this time, I'll turn the call over to Charles.

Thanks, Kat. Good afternoon and welcome to our first quarter earnings call. Before we get into the results of the quarter, I want to take a moment to acknowledge the unprecedented times in our world and share our approach to this continuously evolving situation. First and foremost, our hearts go out to all those who have been impacted by COVID-19, and we extend our gratitude to all the frontline workers who are helping to keep us safe and healthy as we navigate this together. From the beginning, we've approached this situation with a consistent set of priorities: protecting the health and safety of our employees, customers and partners; ensuring the availability and continuity of our services that underpin the operation of the digital economy; and stepping up to do our part to mitigate the impacts of this crisis on people and communities around the world. Very early on, we activated our business continuity plans with the goal of ensuring seamless operations through this crisis. I'm incredibly proud of our teams across the company and moved by the care, kindness and courage they are demonstrating each day in service to each other, to our customers and to our communities. As in many other crisis situations through the years, the dedication and professionalism of our operations team has been unwavering, particularly as they were forced to adapt to our policies and procedures to rapidly changing conditions, keeping safety first while ensuring responsiveness to the needs of our customers. Thanks to our global teams, our facilities have remained safe, available and fully operational, and our customer satisfaction scores are at an all-time high. As is often the case, times of crisis reveal fundamental insights about an organization, and COVID-19 is no exception. First, we have seen remarkable resilience of our people and the tremendous strength of our culture. We talk every day about the magic of Equinix—a reference to our culture that might sound light or ephemeral to many, but when a global pandemic puts every aspect of your business and your life into flux, you quickly realize that 10,000 people committed to values like 'we before me' and 'find a better way' is truly a force to be reckoned with. Second, we're seeing a magnification of the role that Equinix plays not only for our customers but in the basic operation of our society. The massive work-from-home experiment in which we find ourselves has created a spike of near-term demand from a variety of customers, much of which we believe will sustain even as we calibrate on a new normal. And perhaps most importantly, the unique characteristics of this particular crisis have increased the resolve we see from customers relative to their focus on digital transformation as a long-term priority and have highlighted the relevance of Equinix in supporting these efforts. But this crisis has also created a level of distraction and friction in the overall economy that reinforces the importance of the real-time on-demand scalability provided by services like ECX Fabric and Network Edge, and highlights the need for us to continue our efforts to deliver an even more digitally-enabled experience for our customers. And finally, it's times like these where we must stay focused on long-term value creation and maintain the level of commercial discipline that has served us so well for the past decade. We continue to make prudent decisions in the face of our current realities, maintaining the priorities I outlined and ensuring that our balance sheet will sustain us through a wide range of scenarios. These explicit decisions, along with some limited purchase and installation delays, have led us to modestly widen our full-year guidance, but we continue to see strong underlying performance of the business with particular vibrancy in our market-leading interconnection franchise, which is rapidly approaching a $1 billion run-rate business. Our funnel remains healthy with a line of sight to a strong Q2, and we're reaffirming our AFFO guide as a midpoint for the year on a constant currency basis. We are delighted that the Equinix business model continues to be resilient through times of uncertainty enabling us to step-up for our employees, our customers and our communities. While there are undoubtedly many challenges and much uncertainty still in front of us, I've never been more optimistic about the future of Equinix and the magnitude of the opportunity ahead. Now, let me turn to the quarter and the details of our results. We had a great start to the year, delivering strong Q1 bookings, underpinned by a diverse customer demand and robust interconnection growth. Our bookings span more than 3,000 customers, with cross-border bookings up substantially year-over-year. We processed over 4,000 deals in the quarter as our retail go-to-market engine continues to scale in response to our expanding market opportunity. Turning to our results, as depicted on slide three, revenues for the first quarter were $1.4 billion, up 7% year-over-year. Adjusted EBITDA was up 5% year-over-year, and AFFO was meaningfully ahead of our expectations. Interconnection revenues grew 15% year-over-year, steadily rising in the last few quarters and a strong reflection of demand across our portfolio of interconnection products, supporting a variety of customer needs and use cases. These growth rates are all on a normalized and constant currency basis. Our interconnection portfolio reflects a unique product set that is driving quantifiable customer value. We now have over 370,000 interconnections and delivered our 13th consecutive quarter of adding more interconnections than the rest of the top 10 competitors combined. In Q1, we added an incremental 6,800 interconnections fueled by video streaming and conferencing services and offset by a slight increase in network grooming after a Q4 pause. Peak Internet Exchange traffic grew 44% year-over-year and over 20% quarter-over-quarter, a significant jump driven by work-from-home traffic spikes. Customers are scaling into previously provisioned 100-gig growth capacity and ordering new capacity as we head into Q2. And ECX Fabric continues to be a bright spot with strong growth in volume and ARPU as higher bandwidth and inter-metro connections become a larger share of the total. In March, we closed our acquisition of bare metal leader Packet, accelerating our ability to deliver physical infrastructure at software speed and enabling both service providers and enterprises to quickly and seamlessly deploy hybrid and multi-cloud architectures. Bare metal is a rapidly emerging category of digital infrastructure that enables businesses to deploy workloads on secure single-tenant hardware distributed geographically to support high levels of application performance and integrate fully with their choice of software and management platforms across a range of vendors. Deploying bare metal as a service on platform Equinix allows companies to accelerate time to market and reduce CapEx while enabling new use cases that require both public cloud and private infrastructure. This is a strategic part of our vision to evolve platform Equinix, interconnecting and integrating global businesses at the digital edge. We're excited to welcome the Packet team on board and are pleased to report that we expect the Packet acquisition to be roughly breakeven in 2020 from a dilution perspective. In April, we also announced our next milestone in our hyperscale strategy, launching a new xScale joint venture in Japan with GIC, following the success of our initial xScale JV with GIC in Europe. Our xScale approach is a critical element in our strategy amplifying our already deep balance sheet and allowing us to deliver superior returns on invested capital while strengthening Equinix's leadership position in the cloud ecosystem and leveraging our substantial existing presence and go-to-market strength in major markets around the world. Now, let me cover highlights from our verticals. Our network vertical achieved its third highest bookings, driven by strong network reseller activity as well as meaningful capacity upgrades to support increased bandwidth for work-from-home employees. Expansions included Hurricane Electric, a leading global Internet backbone, utilizing ECX Fabric across 33 locations to allow enterprise customers real-time access to their IP transit offering as well as Reseller Goal Data, a leading Americas telecom provider deploying edge nodes in advance of a cable landing station to improve connectivity with Latin America. Our financial services vertical continues to diversify led by APAC and capital market wins. This sector saw healthy new logo adds with meaningful growth in Fortune 500 and Global 2000 customers. New wins and expansions included a Fortune 500 financial services firm re-architecting their network and securely accessing ecosystem partners and a top five global currency exchange tapping into our dense financial services ecosystem across eight locations. Our content digital media vertical saw solid bookings with strength in video and social media. Expansions included Zoom extending coverage and scale to support their explosive market demand as well as TikTok, a top 10 social media platform deploying edge nodes to support coverage and scale of its content delivery platform. Two good examples of COVID-related demand on platform Equinix. Our cloud and IT vertical also saw strong bookings led by APAC and a significant increase in ECX Fabric participants. Expansions included a Fortune 500 security and networking company deploying infrastructure to support new product offerings worldwide and a Japanese IaaS MSP deploying infrastructure to support customer experience and ecosystem access. Our enterprise vertical saw healthy bookings despite COVID-related friction in the back half of the quarter reflecting broad strength, including government, healthcare, and education. We continue to focus on helping firms re-architect their infrastructure to solve the challenges of speed, scale, and security while enabling the move to next-generation digital platforms. New wins included Phreesia Inc., a U.S. healthcare platform, deploying regional infrastructure to deliver an enhanced customer experience as well as a Brazilian education institution deploying to support digital transformation and improved performance. Our channel program accounted for approximately 30% of bookings, and we continue to see great productivity from this go-to-market vector. We processed over 2,000 channel deals this quarter, our highest ever, with wins across a wide range of industry segments with projects focused on digital transformation efforts as well as COVID-19 response. New channel wins this quarter included a notable win with Verizon for a premier U.S. retailer transitioning from on-premise data centers to a hybrid multi-cloud solution to enhance elasticity and performance, and a joint win with British Telecom for a Fortune 150 biopharma firm deploying a multi-region SD-WAN solution optimized for speed and agility. Now, let me turn the call over to Keith to cover the results for the quarter.

Thank you, Charles, and good afternoon to everyone from Burlingame, California. Equinix yet again delivered another very solid quarter of performance. Our success stems from the strength of our teams, who come to work day in and day out to meet the needs of our customers and so many others, including you, our shareholders. We started 2020 well positioned to create significant value for the year and beyond. And right out of the gate, the team delivered as our go-to-market engine yet again produced a solid set of diversified bookings in the quarter. It was our second-best Q1 bookings quarter in our history. So, as we sit here today, we firmly believe our platform is not just relevant, but even more essential as the world we know quickly shifts to digital, only accelerated by the opportunities and the challenges created by COVID-19. Our xScale and Packet acquisitions, which both closed in Q1, are tracking well against our early expectations. Also, after the quarter-end, we entered into our second hyperscale JV for the Japan market, which we expect to close in Q3 and are already looking at our third and other joint ventures for the rest of Asia and elsewhere. And we continue to look for other platform enhancing acquisitions, both targeted and opportunistic. Our inter-region activity remains strong, a reflection that we're selling well across our global platform. We continue to enjoy net positive pricing actions resulting in very firm MRR per cabinet on a currency-neutral basis. And lastly, after funding the two acquisitions this quarter, we have about $1.2 billion of unrestricted cash on our balance sheet and pro forma for our new 364-day facility. We have an incremental $2.5 billion of liquidity to support our global growth and expansion initiatives. We have an active construction pipeline with 32 major projects currently underway across 22 metros in 14 countries. We made a few minor adjustments to our ready-for-service dates in certain markets while we continue to work closely with our suppliers and partners to deliver the capacity as close to the target dates as possible with limited impact on our guidance for the year. And we expect another year of active builds and are maintaining our full-year capital expansion guidance. As we have said before, we believe the diversity of our business across verticals, sectors, markets, and customers puts us in a highly favorable position to both capitalize on industry trends, but also weather the macro shifts and increased volatility. Specifically, our current revenue exposure to the travel, energy, and retail industries is less than 3%. Also, I want to reiterate the importance we place on our employees, our customers, and our communities. Let me provide you two examples: we placed certain restrictions on access to our IBXs to protect both our employees and our customers. As a result, in certain circumstances, we're providing three Smart Hands professional services to the affected customers for a period of time. This has a direct impact on our short-term revenues, but is the right thing to do. This adjustment has been reflected in our current financial guidance. Also, our greater-than-2,500 IBX employees received a one-time cash bonus to help them address personal needs, given the shelter-in-place requirements in their communities, while all other employees were provided a stipend to help support their work-from-home requirements. As a result, for the first quarter, the COVID-19 impact to revenues and adjusted EBITDA was $3 million and $14 million, respectively. On a constant currency basis, and absent the COVID-19 adjustments, both revenues and adjusted EBITDA were above the top end of our guidance range and AFFO and AFFO per share were above our expectations. Now, let me cover the quarterly highlights. Know that all growth rates in this section are on a normalized and constant currency basis. As depicted on slide four, global Q1 revenues were $1.445 billion, up 7% over the same quarter last year, our 69th consecutive quarter of revenue growth. Q1 revenues, net of our FX hedges, included a $15 million negative FX impact due to weaker operating currencies with particular impact on the Euro, the British pound, and the Brazilian real when compared to our prior guidance rates. Global Q1 adjusted EBITDA was $684 million, up 2% compared to the prior quarter and 5% over the same quarter last year, mainly due to strong revenue flow-through from price increases and deal mix. As is typical, we had about $18 million of higher seasonal costs in Q1, primarily attributed to the FICA reset and our annual sales conference. For Q1 adjusted EBITDA performance, net of our FX hedges, included a negative $7 million FX impact when compared to our prior guidance rates. Global Q1 AFFO was $535 million, above our expectations on a constant currency basis due to strong operating performance and lower than planned interest expense and income taxes. Our strong operating performance is expected to offset financial impacts related to COVID-19. And as such, as Charles noted, we are reaffirming our AFFO and AFFO per share guidance at midpoint on a constant currency basis. Turning to our regional highlights, whose full results are covered on slides five through seven. EMEA and APAC were the fastest MRR growing regions on a normalized year-over-year basis at 12% and 9%, respectively, followed by the Americas region at 4%. The Americas region saw its best-ever Q1 price-adjusted gross or PAG bookings with a high number of small deals and healthy pricing. Also, as expected, the Americas region continued to export substantial activity to the other two regions, highlighting the value of our global platform and the strength of the Americas selling engine. Bookings included wins with mission-critical digital infrastructure networks and work-from-home service providers. We continue to expect the Americas revenue growth rate to trend upwards to 5% or greater as we progress through 2020. Our EMEA region saw growth across its 22 metros and limited impact from COVID-19. Demand was weighted towards our four largest markets, being Amsterdam, Frankfurt, London, and Paris, with channel activity driving solid bookings into our smaller markets as well. EMEA cabinets billing reduced over the prior quarter due to timing of cabinet installations in both Q4 last year, which was very strong, and delayed installations in Q1 this year, which we expect to be realized in Q2. Deal pricing remained very firm. And Asia-Pacific region saw solid bookings with a record in Hong Kong and a significant uptick in Shanghai. Demand was strong across all verticals with increased need for bandwidth across many organizations, given the extended work-from-home mandates. And now looking at the capital structure, please refer to slide eight. As it relates to our liquidity position, we ended the quarter with $1.2 billion of unrestricted cash on the balance sheet with an additional $1.7 billion of unused capacity from our revolving line of credit. Our net debt leverage ratio was 3.9 times at Q1. Annualized adjusted EBITDA up slightly due to the cash used to complete the acquisitions in the quarter. Also, we remain steadfastly committed to driving long-term shareholder value. And we will continue to fund the business from the healthy operating cash flows generated by the business while also accessing both the debt and equity capital markets as appropriate. Also, note that achieving our investment-grade ratings last year has proven to be a highly strategic and an important milestone for Equinix. Despite the recent volatility in the debt markets, we continue to review opportunities to refinance our existing debt tranches on a net present value positive basis. And today, that would not be possible without being investment-grade rated. We do expect to refinance a portion of our outstanding debt over the next 12 months. And note, there is currently no benefit attributed to our debt refinancings in the current AFFO or AFFO per share guidance. Turning to slide nine for the quarter. Capital expenditures were approximately $400 million, including seasonally low recurring CapEx of $18 million. We opened two new expansions in the quarter, including a new IBX in Warsaw. And we announced two new expansion projects, one in Frankfurt and the other in Singapore, two of our strongest global markets. We continue to expand our ownership, acquiring land for development in both France and Australia. Also, we recently purchased our São Paulo one IBX. Revenue from owned assets remained at 55%, but we expect this percent to rise by the end of the year. Our capital investments delivered strong returns as shown on slide 10. Our now 148 stabilized assets increased recurring revenues by 5% year-over-year on a constant currency basis. Also consistent with the prior year, during Q1, we completed the annual refresh of our IBX categorization exercise. Our stabilized asset count increased by net 12 IBXs. These stabilized assets are collectively 84% utilized and generate a 29% cash-on-cash return on the gross PP&E invested. And please refer to Slides 11 through 15 for our summary of 2020 guidance and bridges. Do note, our 2020 guidance includes the financial results from both the xScale and Packet acquisitions. Starting with revenues, we expect to deliver a 7% to 9% growth rate for 2020, a reflection of the continued momentum in the business and includes a negative FX impact of $105 million, net of our FX hedges compared to our prior guidance. Also, we expect revenues attributed to the Packet acquisition for the 10-month period of our ownership to range between $32 million and $40 million. And MRR churn is expected to remain in our targeted range of 2% to 2.5% per quarter for the year. We expect 2020 adjusted EBITDA margins of approximately 48%, excluding integration costs, the result of strong operating leverage in the business, offset in part by the expected higher utilities and property tax expense and a meaningful investment in our go-to-market and product organizations. We expect to incur $20 million of integration costs in 2020, $10 million to integrate Packet and the remaining $10 million to finalize the integration of our various other acquisitions. 2020 AFFO is expected to grow between 11% and 16% compared to the previous year. For 2020, we expect AFFO per share to grow between 8% and 12%, excluding capital market activities. Including capital market activities, we expect AFFO per share to be greater than 8%, consistent with our long-term AFFO per share growth objective, as discussed at our June 2018 Analyst Day. So, let me stop here and turn the call back to Charles.

Thanks, Keith. Despite the challenges from COVID, the Equinix business is performing well, and we remain focused on the clear set of priorities we laid out at the beginning of the year: investing in our people; evolving our platform and service portfolio to meet the changing needs of customers; expanding our go-to-market engine to fuel long-term growth; and simplifying our business to drive operating leverage and enhance our customers' experience. As we continue to navigate an uncertain environment, we will remain diligent, flexible, disciplined, and prepared across the company from how we set up our IBX technician shifts to enhance safety to increasing balance sheet liquidity, investing in new service development and hiring top talent to expand our selling engine, all while closely tracking our financial and operating metrics to ensure profitable growth and maintain a keen focus on AFFO per share as a lighthouse metric for the business. As we have in prior market dislocations, we will manage the business prudently with a long-term orientation and a clear objective to extend our market leadership. As our customers continue to make clear, the breadth of our product portfolio, the reach and scale of our platform, the depth of our balance sheet and, critically, the passion and resilience of our people will not only enable Equinix to weather the storm but will position us to execute aggressively on the other side of this unprecedented crisis and capture the massive opportunity that lies ahead. So, let me stop there and open it up for questions.

Our first question will come from Phil Cusick with JPMorgan. Phil, your line is now open. Please check if you are muted.

Hi, this is Richard for Phil. I just want to get a better sense of the bookings through the quarter. Was it pretty steady? Or did it start to fall off at the end? And what have you seen more recently? And then a quick follow-up on Packet.

Hey Richard. Yes, I think we definitely saw it was quite a normal quarter for the first couple of months. Then, as the COVID situation became more acute, there was some uncertainty that created friction. However, we had a really strong quarter overall. There was some buying friction in the system, but we entered Q2 with a healthy pipeline and actually saw strong early conversion of that pipeline during the quarter. Right now, we're seeing early signs of a return to normal, and our sales team is becoming more accustomed to managing sales cycles in this environment. Overall, we continue to feel good about the productivity of our sales bookings.

And then with Packet really quickly, it has a pretty wide range. But I guess, looking beyond this year, should we expect more steady growth? Or can we see a bit more of a hockey stick as it kind of scales out?

That's a great question. I do think that we can accelerate growth in that business. It's obviously a relatively small business now. I think there's a meaningful opportunity associated with this kind of bare metal private infrastructure immediately proximate to the public cloud. And by the way, I think it really fits well with how people are responding to COVID in terms of their desire to be able to deploy infrastructure in a more frictionless way. We think as we add enterprise feature sets, as we extend our partnerships with the software players and platforms like VMware, Red Hat, et cetera, that people have really invested significantly and that it's going to be a real tool for us as people deploy hybrid and multi-cloud architectures. So, I think that we'll have to reset when we give you a more longer-term guide and talk about that. But I do think there's an opportunity for us to expand growth in that offering.

Great. Thank you.

Our next question will come from Jonathan Atkin from RBC Capital Markets. Your line is now open.

Thanks very much. So, two questions. One, kind of high level. Any impacts in Europe that you're seeing from the merger involving interaction? And then a second one for either Keith or Charles. We're kind of now beginning in May and where have things settled out now that we're into COVID on pricing? I took away from Keith's comments that pricing is actually pretty healthy, but where are we kind of settling out in terms of the run rate around cabinet adds and cross-connect adds? Thank you.

Sure. Remind me the first one, Jon, I'm sorry.

Europe and any impacts you're noticing from the merger involving the interaction, any opportunities with that?

I believe there hasn't been a significant shift in the competitive landscape in Europe, and our demand remains robust. We are experiencing a healthy pipeline, solid bookings, and strong pricing in the European region. Therefore, no meaningful changes have been noted. We will keep an eye on this to see if any changes occur. Regarding the broader COVID situation, particularly as it relates to cabinet additions and pricing, I will let Keith provide his input. However, as stated earlier, firm pricing in Europe is holding strong, and we are effectively managing adjustments in our interconnection pricing. This has positively impacted our price-adjusted gross bookings. In Europe, the cabinet additions displayed unusual behavior, with some shifting of expected activity from Q1 to Q4 and Q2. We experienced a very strong Q4 and anticipate a robust Q2, despite seeing a weaker Q1. This does not reflect a decline in demand; rather, it's important to consider the rolling four-quarter averages for cabinet additions. Cabinet additions may slightly decrease in Europe as we refine our approach. We prefer to direct hyperscale business to the xScale joint ventures to ensure our resources are dedicated to high-return retail operations. This strategy will somewhat affect cabinet additions, but it aligns with our overall business guidance and is expected to positively influence other core operating metrics. Keith, do you have anything to add?

Charles, just further to your comments, I'd make the comment that we saw not only strong pricing in Europe, we saw it across the platform, which is important, Jon, as we think about our business. We talked about the fact that there's net positive pricing actions. Again, it's not just Europe, but again, it's across the platform. And it gives us confidence that we're continuing to see, on a currency-neutral basis. Clearly, there was some currency impact to the metrics which we share in our earnings deck. But overall, we're delighted with what we're doing. And part of what Charles also alluded to and we talked about it, Packet and some of our other service offerings, it is our view that it will continue to add value on a per cabinet basis. I think there's going to be a higher attach rate, and I think interconnection is going to continue to be strong. And all of that sort of lends to a more positive pricing environment for Equinix.

Yes, I want to add one more point that connects your question and Richard's earlier question. From a booking perspective and overall sales productivity, we're experiencing a mix of ups and downs. As I mentioned, there was some friction towards the end of Q1, but we're starting to see improvements as people adjust. Interestingly, we are gaining better access to decision-makers who seem to have a shift in their schedules, and they are more determined to make commitments to advance their digital transformation efforts. This might lead to some delays depending on the sector and their other pressing issues, but overall, there is a stronger commitment to digital transformation. So, it's a combination of factors, but we have made a solid start in Q2 and are optimistic about our pipeline.

If I could ask one question for Keith regarding the variability in maintenance capital expenditures. It was quite significant, and you mentioned it briefly. What is the composition of that category? What were the surprises related to it? What are the normalized levels that you're guiding us toward? Could you also elaborate on what contributes to that and what the sources of variability might be moving forward? Thank you.

Sure. Yes. We did see slightly less this quarter than we anticipated, roughly 1.2%. If I go to the same quarter last year, it was 1.5% of revenues. Meaning, certainly, as we're all aware during the latter part of the quarter, things started to slow down a little bit. We also were putting our IBXs into a more restricted fashion. No surprise as things took root in different parts of the world. But all that said, when you look at our overall guidance, we're still looking at somewhere around $150 million to $160 million of capital that will go into recurring and only a portion of that, of course, is maintenance, roughly 2% of our recurring CapEx is maintenance. And so you'll see it go back to a more traditional level in Q2. That's reflected in the guidance. And then for the year, you'll see it roughly a little bit lower than we saw last year, but roughly in line with what our expectations would be on a go-forward basis.

Thank you.

Our next question will come from Frank Louthan with Raymond James. Your line is now open.

Great. Thank you. Two questions. One, any of the recent strength coming from business you think might be being pulled forward as customers are kind of grabbing some space, it could impact the back half. And then what do you think the conversion rate will be on virtual cross-connects as you've been doing well with those and as folks are signing those up and then converting them into more permanent facilities. Thanks.

I'm sorry, I lost the first question again. These double questions are challenging for me today.

Yes, just any recent strengths that you've seen, do you think any of that's coming from business that might be pulled forward from, say, the back half that could maybe cause a headwind then?

Yes, I don't think so. I believe we are seeing a response to that. The question of whether the demand driving that will be sustained over time is a valid one. However, for the most part, people design their networks and overall delivery systems with a certain level of capacity. The shift to work-from-home has significantly used up that capacity, prompting many to quickly add more. We were very responsive in assisting with that. I think there’s a possibility that the capacity could increase as we settle into a new normal, but I don't expect it to have a major impact since what we saw was more of a spike, somewhat counterbalanced by other factors. I anticipate a return to normalization, particularly in the latter half of the year, assuming there aren't any unexpected disruptions. From a capacity standpoint, most markets appear to be in good condition, and I'm not concerned about losing that capacity leading to constraints in the second half. Regarding interconnection, I am optimistic about our business's trajectory. We were at the lower end of our guidance for total count but experienced a strong quarter in gross additions, our best in several years. There was some increased churn due to network tuning and migrations from 10 to 100, as well as consolidation among those undergoing acquisitions. For virtual cross-connections, we mentioned in the script that ARPU is increasing, reflecting customers purchasing ports and provisioning cross-connects, which is driving traffic and enhancing ARPU on a per-connection basis. We are seeing this aligned with, if not better than, our physical cross-connects, and we are very pleased with the overall progress of the ECX Fabric.

All right, great. Thank you very much.

You bet, Frank.

Our next question will come from Michael Rollins from Citi. Your line is now open.

Hi. I have two questions; I'll break it up into two parts. The first one is just thinking about the disclosure that your channel, I think you said, was 30% of bookings this quarter. I'm curious, is that what's driving that strength? Is it the enterprise interest in adoption? Are there other things that are driving that up? And what kind of visibility do you get into the pipeline that the channel is looking at versus your own sales force?

Sure. Was that it, or do you have another question?

I was just going to ask for a clarification also. When you described the zero to $50 million revenue impact from COVID-19. Earlier in the conversation, I think you mentioned Smart Hand fee waivers. And was curious if that range is only waivers for Smart Hands services? Or are there some other things that were just anticipated in that guidance impact range? Thanks.

Sure. I'll take the first question, and then Keith can address the second one, and I'll add anything necessary. Regarding the channel, we're very excited about the momentum we're experiencing. This is mainly due to our enterprise market, where we're noticing the effectiveness of our channel partners in reaching enterprises with whom they have established relationships and existing contracts. Additionally, some channel partners are combining our offerings with theirs to provide comprehensive customer solutions. Hyperscalers are also part of this group, as they are recognizing the clear demand for hybrid cloud solutions. When their sales cycles are hindered by the need to fulfill the private component of the hybrid cloud, they are coming to us for assistance, which helps them meet public cloud demands. We are observing this across various channel partners and vertical markets, focusing on integrating our value with that of our partners to address customer needs, particularly in the enterprise sector. In terms of visibility, I would describe us as primarily working in a sell-with channel model. We are still in the early stages of channel maturity, and we aren't yet at a point where partners are independently selling our value proposition. They typically collaborate with our sales team, and we work together to engage clients. We compensate both our direct sales representatives and the channel partner, which is relatively modest compared to the total customer lifetime value. We're gaining good visibility, and since deals must be registered for commission, we have solid insight into the overall channel pipeline. Now, Keith, I'll let you take the discussion on the revenue guidance.

Sure. Regarding the revenue reflection of zero to $50 million mentioned by Charles, it's important to note the impact of the ongoing global pandemic and the uncertainties it has caused. However, we had a strong first quarter, and Charles pointed out that we have a very solid pipeline and a great start to the second quarter. We are aware of potential implications for the business as part of our scenario planning. We have considered possibilities such as an extension of the book-to-bill cycle or a weakening pipeline. While we haven't observed those issues yet, they remain in our thoughts. Consequently, when assessing the overall effects of the COVID-19 pandemic, we've estimated a range of $0 to $50 million. In the first quarter, we have already absorbed $3 million in costs, with $2 million related to offering free Smart Hands services to customers due to restrictions on our IBXs, along with a small sales allowance. Moving forward, we will continue to provide Smart Hands services selectively to certain customers until we gain clearer insights on how our business, and others globally, will reopen. We are also considering potential customer impacts concerning invoice concessions and write-downs for companies that may go out of business. We have factored all these considerations into our revenue guidance. Despite these challenges, we are committed to achieving our AFFO target at the midpoint or higher. Currently, the key takeaway is that we are providing free Smart Hands services in select cases to certain customers.

Yes. And Mike, that range is influenced by more factors than just Smart Hands, as Keith mentioned. Given the uncertainty regarding the extent and duration of what we might encounter, we thought it was wise to take into account other elements like book-to-bill and a modest level of concessions. We aimed to assess those and determine the potential impact throughout the year, adjusting our plans accordingly. However, we are optimistic about the early progress in Q2 and the discussions we’re having with customers, which are minimal regarding concessions. Overall, we feel positive about our direction.

Thank you very much.

Our next question will come from Simon Flannery from Morgan Stanley. Your line is open.

Great. Thank you very much. Good evening. I wonder if you could update us a little bit on the xScale progress. How are things going with the initial JV? Nice to see the latest signing here. And then just continuing on the previous theme, you had churn at 2.4, you reiterated the two to 2.5 range. Do you think you're likely to remain at the upper end over the next couple of quarters? Or whether it was that more the onetime items that you were calling out, so you might go back down to where you've been in the last couple of quarters? Thank you.

xScale is performing well, and there is considerable demand. However, it's a complex business involving both the construction and management of large-scale projects, as well as addressing the needs of our significant and demanding customers. Nevertheless, they have consistently shown a strong desire for us to meet part of their extensive demand. We are actively engaging with them and see a robust pipeline not just for existing projects, but also for entering new markets. We maintain healthy discussions with our customers. Our strategy isn't focused on chasing market share at any cost; rather, we aim to fulfill the market demand essential for our positioning in the cloud ecosystem, and we believe we are succeeding in those discussions. Additionally, we are excited about the Japanese joint venture, which we view as a promising market. We believe we are well-positioned there, with supply expected to be somewhat limited, leading to significant interest in the capacity we plan to introduce. Overall, I feel positive about this situation. As Keith mentioned, we are also exploring more joint venture opportunities globally. Regarding churn, we did experience some that affected our EMEA cabinet additions, which brought us towards the higher end of our range. However, we feel comfortable within the 2 to 2.5 range and are focused on managing it towards the lower end, but we are still at ease with our current position.

Okay. Thanks a lot.

Our next question will come from Ari Klein from BMO Capital Market. Your line is now open.

Thanks. Chuck, you mentioned some friction in the enterprise. How difficult is it to acquire new clients in the current environment? What measures are you taking to address this? Additionally, you mentioned network grooming affecting cross-connect net adds. Was any of that related to COVID, or is it a different issue?

Sure. We had a good quarter regarding new logos, and we analyzed whether this occurred in the first two-thirds of the quarter or in the latter part. The latter part was lighter, and our bookings from new customers were slightly lower than usual, though not significantly. We're finding it more challenging as we adapt to new skills required to finalize accounts without physical interactions. However, we're already seeing progress and have provided our sales teams with new tools to enhance their effectiveness. There is some friction involved, which is why we mentioned widening the bottom end of our range. We hope to return to more normal conditions soon, but even without that, our sales team can remain productive, although there is undeniable friction in capturing new logos. Regarding network grooming, it wasn't caused by COVID but rather linked to some migrations and network consolidations from past acquisitions. We typically see a slowdown in Q4 due to network quiet periods, followed by activity in Q1, which isn't surprising. I believe we've mostly dealt with the initial surge of large players, but there will be ongoing opportunities as it becomes economically viable for others to upgrade their electronics based on route analysis. We're confident in our quarterly guidance of $7,000 to $9,000, and the gross adds are particularly promising.

Great. Thank you.

You bet.

Our next question will come from Colby Synesael with Cowen. Your line is now open.

Thank you. I have two follow-up topics. First, regarding Jonathan Atkin's earlier question about your bookings for the full year in the current environment compared to your expectations at the beginning of the year on January 1st. Do you anticipate that bookings will be down, remain the same, or increase compared to what you had initially expected for the full year of 2020? Second, concerning Rollins' question about the $50 million, I noticed that in your disclosures you referred to Remote Hands. However, given the actual figure in the first quarter, which was $2 million as opposed to the $50 million, it appears there’s a significant difference. Is it accurate to say that you are being conservative in your estimates, effectively planning for potential scenarios that may not yet be evident? Could this actually represent an opportunity for upside as the year progresses? Lastly, just a housekeeping question about your upcoming two-year Analyst Day in June in New York City. What are your expectations for that event? Thank you.

Sure. Let me address the first question. I’ll provide some information on the second one, and then I’ll ask Kat to share updates about Analyst Day. Regarding bookings, if we evaluate our expectations for the remainder of the year compared to what we initially anticipated, it’s clear we’ve slightly adjusted our revenue guidance downward by widening the lower end of the range. This indicates that we anticipate some risk leaning towards the downside for both bookings and revenue, but this risk is fairly modest. That’s how I would summarize it. We experienced strong bookings in Q1 and Q2 and have a solid pipeline, with some of the challenges we faced during the peak of COVID starting to ease. We are hopeful the associated risks will diminish. However, because we widened the lower end of our range, we’re expecting a bit more downside risk than originally planned. Nonetheless, there are still opportunities to bridge those gaps over the year. As for the second question, I reiterate that it all pertains to Smart Hands, which accounts for part of it. As Keith mentioned, we achieved a couple of million in the quarter, but it was a relatively short time frame. If the same occurs in Q2, Q3, and Q4, we would expect to see a larger contribution to that $50 million. There are also potential delays in book-to-bill, concessions, and sales reserves to consider that might affect this as well. So, our assessment reflects the risks related to widening the lower end while keeping the top end stable. If conditions improve quickly and the business continues to do well, we believe we can close those gaps. Keith, do you have anything to add on this topic?

I think it's well said, Charles. Thanks.

Colby, in response to your question about Analyst Day, we will be postponing the event due to the current circumstances. We enjoy hosting our investors in New York and usually organize a large gathering, but COVID necessitates this delay. In the interim, Chip and I will be increasing our virtual outreach efforts and plan to enhance our participation in conferences and engagements. We are looking forward to an active month of May and June with our investors.

Great. Thank you.

Our next question will come from Jordan Sadler with KeyBanc. Your line is now open.

Thank you. I wanted to follow up on a few other questions or topics that have been discussed. First, regarding concessions and collections looking into April, either related to the $50 million or otherwise. Have you received any requests from your customers? Can you quantify either the number of requests or the percentage of rent affected by those requests to date? Then separately, circling back to the book-to-bill, can you quantify any delays you've experienced due to COVID or the lockdowns linked to COVID, particularly as it pertains to book-to-bill? Additionally, concerning the churn, specifically in EMEA, could you provide more details on what that was attributable to? Lastly, any information on the timing in the quarter would be helpful. Thank you.

Sure. That's a lot, but I wrote it down this time and I make a note so I can remember it. Keith, maybe you can start with the first pieces there on concessions and collections, et cetera.

Sure, it's still early in the process. In the latter half of the quarter, we began to feel the larger impact of the pandemic. However, in our Q1 report, our Days Sales Outstanding (DSOs) actually improved, especially in Europe for extended terms, dropping by one full day to 42 days. This indicates that our collections remain strong. Our accounts receivable declined quarter-over-quarter, which suggests that this isn't currently an issue. Looking into April, we have a good understanding of our performance, and we feel positive about the first month of the new quarter. Regarding concessions, some customers have requested them, but it's worth noting that our top 50 customers account for 40% of our business, and typically, requests for concessions come from smaller customers. At this point, I don't have specific visibility on significant requests, but we expect that some customers may eventually seek concessions, as is being reported in the marketplace by our peers in similar industries. I'll pass it back to you, Charles.

Yes. Regarding the book-to-bill, we occasionally encounter instances where clients say they were supposed to implement something and start billing on a certain date. However, we're not in a position to send our teams to complete that deployment, so we prefer to delay it a bit. While this is fairly limited overall, we do see some of these requests and are accommodating them as we believe it's the right approach given the circumstances. There aren't many of these cases. Regarding the churn in EMEA, we experienced some significant turnover. This is fairly typical, as I mentioned earlier, and it's important for us to uphold our commercial discipline. This includes focusing on larger contracts that yield lower returns on investment and observing how clients are shifting towards different solutions. Nothing particularly unexpected occurred, but a few incidents this quarter did increase churn and reduce cabinet additions. Those cabinets, however, will be recycled and resold at a much higher price and margin, thanks to a favorable trend in the business mix in EMEA.

Thank you.

Our last question will come from Erik Rasmussen from Stifel. Your line is now open.

Yes, thank you very much. I'll keep it brief then. Just on the JV announcement for your xScale data center built in Japan, can you just comment on how you see this change your opportunities across the region and your market position? And then with that, who do you see as your biggest competitors in the region? And then just the follow-up there would be, I know you've been focused on international markets, but at what point do you see the U.S. becoming more interesting? Thanks.

We feel very positive about our position as a global platform. Expanding our strength in key markets worldwide allows us to better meet our customers' diverse needs, which enhances our global presence. In Japan, we anticipate potential supply constraints that could affect customer demand, making us optimistic about our ability to drive utilization and bookings, leading to strong returns from our joint venture there. This is part of a larger strategy, as we have a strong business in the APAC region and are eager to serve customers in key markets. Regarding the U.S., it remains a highly competitive environment, particularly in areas like Ashburn, which is experiencing supply and demand imbalances that impact prices. However, we are fortunate to have a robust business in Ashburn with strong pricing stability. Our opportunities in the U.S. will likely be more restricted, although we see potential in areas like Dallas, where we could add significant capacity near the Infomart. Yet, we will be selective since we believe there are more promising opportunities globally.

Okay. Thank you.

You bet.

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