Equinix, Inc. Price & Performance (EQIX)

Separately, we recorded a one off off and discrete charge for the impairment of our Hong Kong four asset to totaling $73,000,000 We also recorded a $31,000,000 restructuring charge primarily related to the reduction in force in the quarter. These decisions although difficult at the time, are the right decisions for our business. They allow us to reprioritize where we invest while also reducing the net drag on the business and improving our return on invested capital. Now let me cover the highlights for the quarter as depicted on Slide four. Note that all growth rates in this section are on a normalized and constant currency basis and exclude the impact of lower power costs pass through to our customers. Global Q4 revenues were $2,261,000,000 up 7% over the same quarter last year and at the midpoint of our guidance range with both solid recurring and non recurring revenue growth across our regions. Despite a portion of our ISL fees being deferred into Q1. [indiscernible] Q4 revenues net of our FX hedges included a $22,000,000 FX headwind when compared to our prior guidance rates given the meaningful strengthening of the U. S. Dollar in the fourth quarter. Global Q4 adjusted EBITDA was $1,021,000,000 or approximately 45% of revenues up 9% over the same quarter last year and at the midpoint of our guidance range due to strong operating performance, low down sequentially due to planned timing of spend [indiscernible] Q4 adjusted EBITDA, net of our FX hedges in included a $9,000,000 FX headwind when compared to our prior guidance rates.

Mobile Q4 AFFO $770,000,000 up 10% over the same quarter last year due to strong off offset by our seasonally higher recurring CapEx spend as expected Q4 FFO included a $2,000,000 FX benefit when compared to our prior guidance rates. Global Q4 MR term was 2.5% as plan through the previously discussed deferral of MR churn from late September into early October. Normalized for this timing, churn would have been 2.2%. For the full year, our average quarterly churn was 2.2%, well placed in the lower half of our 2% to 2.5% quarterly guidance range. Turning to our regional highlights whose full results are covered on Slides five through seven. [indiscernible] On a year over year normalized basis, excluding the impact of lower power costs, passed through to our customers, APAC was our fastest growing region at 13% followed by The Americas region at 8%. Our EMEA region grew 2% year over year dampened by the significant ex fuel leasing activity in Q4 of twenty twenty three. Again, as noted earlier, ex scale fees are inherently lumpy and can impact the quarter over quarter and year over year growth rates at the consolidated and regional levels. The Americas region had a strong quarter with solid gross bookings as revenues for the region reached the $1,000,000,000 quarterly revenue threshold for the very first time.

Also, our Americas team had strong sales across our global assets, achieving its best export quarter in two years. We saw particular strength in our Denver, Montreal, and San Diego markets as well as continued momentum in our Tier one metros. Our EMEA business delivered record gross bookings and firm pricing led by our flat metros with strong momentum also in Geneva, Istanbul and Milan. In the quarter, we signed our first power purchase agreement in Italy with Neon to support 53 megawatts of new solar projects. This agreement brings Equinix's total global renewable energy capacity under long term contracts to greater than 1.2 gigawatts. Across 10 countries. And finally, the Asia Pacific region had a great We saw particular strength in both our Osaka and Tokyo markets as we continue to capture significant AI deployments from both domestic and international customers. We also saw strength in our Mumbai Singapore and Sydney markets And now looking at the capital structure, please refer to Slide eight. Our 3.4 times net leverage continues to remain low. Both in absolute and relative terms to our peers. As of year end, we had cash and short term investments of $3,600,000,000 on our balance sheet, due to record customer collections and our financing activity, which puts us in a solid funding position to meet our 2025 capital needs and set us up for 2026.

In the quarter, we issued EUR 1,150,000,000.00 in senior green notes at a weighted average rate of 3.4% Additionally, we repaid $1,000,000,000 of senior notes in the quarter and raised approximately $700,000,000 of equity through our ATM program. We plan to continue to take a balanced and opportunistic approach to accessing the capital markets as and when the market conditions are favorable to fund our future growth. Turning to Slide nine for the quarter. Capital expenditures were approximately $1,000,000,000 in including seasonally higher recurring CapEx of $115,000,000 as planned we opened three major projects since the last earnings call, Barcelona, Jakarta and Rio De Janeiro. We also purchased land for development in Lagos and Paris More than 85% of our current retail our own buildings with long term ground leases. Our capital investments delivered strong returns as shown on Slide our now 177 stabilized assets increased revenues by 3% year over year on both an as reported and constant currency basis. Stabilized assets were collectively 83% utilized and generated 27% cash on cash return on the gross PPE invested. As a reminder, unlike prior years, we plan to update our stabilized asset summary on the Q1 earnings call. And finally, please refer to Slides 11 through six sixteen for our summary of 2025 guidance [indiscernible] Do note all growth rates are on a normalized and constant currency basis.

Starting with revenues, for the full year 2025, [indiscernible] expect top line growth of 7% to 8% As noted, this is on a normalized and constant currency basis, which adjusts but also lower power costs pass through to our customers and the end of sale of our metal product offering. And given our bookings momentum, and our largest backlog in three years and timing of capacity additions across our major metros, our Q1 guidance assumes a $28,000,000 step up in recurring revenues. But continued healthy step ups in recurring revenues over the course of the year. MRR churn is expected to remain within our target quarterly range of 2% to 2.5% per quarter. We expect 2025 adjusted EBITDA margins to be a 190 basis point improvement over last year due to strong operating leverage, [indiscernible] expense management efforts and anticipate the lower power prices And like our revenues, we expect quarterly margins to step up over the course of the year. With a meaningful increase in Q2 margins over Q1 in part due to seasonality and second or near 50%. 2025 AFFO is expected to grow between 912% compared to the previous year and AFFO per share is expected to grow between 79% despite the sizable investment in warehouse capital to support our future growth into twenty six twenty twenty seven and beyond.

And also the refinancing of debt maturing in the year. 2025 CapEx is expected to range between $3.23500000000.0 including approximately $200,000,000 of on balance sheet ex scale spend which we expect to be reimbursed as we transfer assets into our U. S. Joint venture. And about $250,000,000 of recurring CapEx spend. And finally, we're increasing our 2025 cash due to strong operating performance our tenth consecutive year of dividend per share growth since our reconversion. The cash dividend will be approximately $1,800,000,000 a 13% year over year increase 100% of which is expected to be derived from operating performance. So I'm going to stop here and turn the call back to Adair. Thank you, Keith. In closing, Q4 was a record quarter for Equinix Equinix, in a year of record performance. 2024 demonstrated the enduring market demand for the services offered by Equinix Equinix, the execution excellence of our team in and our continued drive to improve our profitability and our return to our shareholders. 2025, we will double down on these qualities and further prime ourselves [indiscernible] We will focus on the elements of our business that define our relevance and our differentiation in a rapidly evolving world. Our product continuum our global reach, our interconnection density and our cloud connectivity.

We will embrace the relentless pursuit of efficiency and a effectiveness in all that we do. We will work to make it easy at Equinix for our customers and our partners, so that we can deliver the greatest value and capture as much of the opportunity as possible. Driving attractive revenue growth, expanding margins and increasing profitability. With that, I'll stop here and open it up to questions. Thank you. We will now begin our question and answer session. Our first question comes from Simon Flannery with Morgan Stanley. Your line is open.

Great. Thank you very much. Good afternoon. Adaira, good to hear the comments on the interest on artificial intelligence and inference.

Had a lot of news in the recent weeks on DeepSeq and the coming more important relative to training and quicker. I'd love to get your perspective on that development. And how you think about inference coming through your numbers in 2025, 2026 and beyond? And I think, Keith, you just mentioned briefly on The U. S. Ex scale JV. It would be great to just get a little update since you've announced that project. Where do we stand in terms of identifying markets, build programs and so forth? Thank you. All right. Thank you so much for the question, Simon.

Yes, it's been an interesting period of time. I think we've seen a step change in compute efficiency along the performance car and that is something that I expect to continue. We expect to see continued innovation in the sector across both training and inference, which we think is a net net positive for the space. The drop in inferencing costs that's implied by the work released into the open source market by DeepSeq I think will enable the economics of AI transformations to become little bit more feasible for a broader set of organizations. And so that's why we feel that this will represent a circular demand driver for our business. As it relates to the actual workload characteristic and the role of inferencing and how that will play out. Certainly, we believe that within the next three years, 80% of apps and processes that operate within businesses will be infused with AI In fact, of our own business is an example of that that, that is something that will be true for us too. You can see the absolute relevance of Equinix to this market opportunity. We are right in the demand center of this opportunity. And in Q4, as I mentioned in my remarks, 50% of the top 25 deals that we closed in Q4 were very much related to deals where high performance compute associated with training workloads and inferencing requirements were very prevalent and present.

One of the things that I think plays very strongly into Equinix's Equinix value proposition is that it is very clear that the market will be multi cloud. And that means that we will have data landing everywhere across all of these clouds. And then in addition to that data profile [indiscernible] that land everywhere in order to process the information and associated with the applications and underpinning capabilities that they are running. So for us, this means that our interconnection density and that heritage of Equinix Equinix connectivity is something that will be as these apps and agents bounce to and from wherever the days is located. We see that we have a wonderful opportunity to look at how we continue to make it easy at Equinix for our customers to deploy these technologies and how we have a pivot a pivotal role in abstracting some of this complexity through programmatic interfaces that will make it easier for our customers to deploy models, easier for our customers to access the APIs that will be key in this architecture and easy for our customers to deploy and mount agents on globally deployed POPs. So we're very very positive on the opportunity.

Very positive about the innovations that we continue to see, We know that this is a market where the innovations will continue to come.

And at a fast pace. And we believe that our position is one that is very balanced and appropriate towards actually encapsulating and garnering as much of that opportunity as So very excited about the potential here. And Simon, let me just capture the second question that you'd asked Again, thanks for asking it. I think there's two aspects in which I want to share with you and the rest of the listeners today. What's going on in the Matrix side and what's going on in Excal. In Adaira's prepared remarks, as you're aware, we've have 16 ex Gil projects currently underway. Now as part of that, one of the things that we've announced that basically 87% roughly 87% of all projects that have been built or that are under construction have been pre sold. Either leased or pre leased. So it gives you a sense of the momentum at least as it relates to the one off fees, the non recurring fees, such as sales and marketing.

So that gives you a sense of just the ask As it relates to Matrix, which really is the tripling of our ex scale business, We're working hard on the Hampton site including working with the different utility provider and infrastructure, our power infrastructure providers to get the power ready available for when we need it. We're also investing in a lot of what I call poor linear commitments both as it relates to power and basically the MEP equipment. Our goal is to have an asset up in 2027 That is our goal and that's what we're working hard towards. So it gives you a sense we're making progress there. That all said, we've got three other sites that we're continuing to look at. In The United States without even discussing where should we go somewhere else outside of The U. S. So again, making I think really good progress. Last thing I'd probably want to just leave you and everybody with is in the guide that we shared with you, there's roughly $40,000,000 of incremental operating expense associated with the amplification of our ex scale business Under new leadership with Tiffany, and putting the resources behind it given that we're going to triple it We're making a really heavy investment And as I said, that's roughly $40,000,000 embedded in the guide that you've seen So it tells you that how committed we are to this next opportunity that's in front of us both as we exit 2025, but more as we look into 2026, 2027 and 2028.

Thank you. Our next question comes from Eric Luchow with Wells Fargo. Your line is open.

Hi, thanks for taking the question. So, Adaira, I just wanted to touch back on the demand funnel that you talked about and the bookings momentum. Maybe you could talk a little bit about what your forward pipeline looks like today? And you mentioned in your prepared remarks pursuing kind of a larger end of the retail co location spectrum or maybe small wholesale depending on the definition. Maybe you could talk about how your bookings have trended in that segment and what the pricing and returns may look like relative to your more core interconnection dense based retail business Great. Thank you. Thank you very much for the question. So first of all, let me say that I have the pleasure in Q4 and continuing into Q1 of being both the CRO of the company and the CEO. So I had the opportunity to be very close with the team as they executed on our Q4 quarter and delivered as we already mentioned, record gross bookings in the quarter. In terms of footprint that we see, one of the other elements that I made in my remarks was that we had the highest volume of non Tier one metros sold during the course of the year.

And Q4 was no different from that perspective. A number of providers who are looking for large footprint capability in order to grow their own businesses and their own services. And of course, that footprint capability needs to be a key products and services offered by Equinix. So we continue to see some pricing strength Service providers throughout the last year. Can you update on when you think that settles back to the kind of lower 2% end of the range on a sustainable basis? Yes. So I think as you saw for Q4, our would impact how our customers are executing in the context of those stabilized assets. Keith, is there anything that you would add to that piece? [indiscernible] It was in Deere's prepared remarks that no surprise to you, we also demand shape based on the needs of the customer. To the extent that there's a customer that is looking To increase meaningfully, where there's more inventory in the form of a cabin or more energy in the form of power you got to demand shape it into the right place because as Adair says, we have very detailed set of processes that allows the team to manage energy that's inside the four walls.

That also had also probably not a surprise to you and there are anybody else. One of the key modifiers to the compensation plan for VPs and above is the the power efficiency initiative or PUE. And so we're always working to drive down the amount of energy that gets consumed through different operational exercises or new technology different software packages and the like. And so to the extent that capacity gets created through that, then we have the ability to sell it sell it to the customer inside maybe an older asset But suffice it to say, again, as Adair said, we manage inventory from a number of different vectors. Again, no surprise whether it's the energy that is consumed, the cooling that is required and the location of that and we appropriately adjust our inventory availability for for IBX on that basis. And again, I would just say that that you're going to put the right customer with the right application and the right needs into the right asset. And that's one of our core tenants in managing our inventory. Thank you, Keith. And there was a second question on people.

Yes. You know what, I'm going to switch topic to expenses. So in 2025, Just wondering broad strokes, any kind of SG and A or COGS or OpEx of any type that might not reoccur in 2026, whether it's due to maybe some some costs associated with your efficiency initiatives or IT or anything else that might not recur in 2020? Six that is an element of your 2025 guide?

Well, perhaps in this case, John, I'll take this and I'll land Adair maybe jump in as appropriate. I think it's very important to sort of really look at what's going on inside the business certainly quarter over quarter and then 2025 over 2024. But suffice it to say, you can see that we're delivering incremental margin this year over 2024 of roughly 190 basis points. 30 basis points of that is just coming and I should talk about revenue, but I can come back to that. But it's coming from basically lower power costs. And that gets consumed by the customer and therefore when you take down revenue related to power, of course, it's the inversion of what we experienced in 2023 margins move up. And so that's one thing. I would anticipate all else being equal It feels like power costs seem like they've they've continued to step down year over year over the last last couple of years. And although customers consume more, but just the overall cost the unit cost of electron has been decreasing. The second thing I would just say that 160 basis points of sort of operational improvement comes from a bunch of many factors.

One, the reference to the reduction in force in the fourth quarter, clearly that's something that is in [indiscernible] and that would extend it to 2026 as well. As we continue to end of life, the metal business again metal was running at a negative EBITDA trend. And as a result, that will continue to improve both we take the one off cost, but we as we continue to widen that down, again 25 over '24 and certainly '26 over '25, it will reduce the revenues, but more operational performance will come into the business And then I alluded to in my prior remarks, the decisions of investing in Matrix today you're investing today for what you will learn tomorrow. Whether it's on the capital side or whether it's on the operating expense side, And suffice it to say, as we get more of these assets up and running in commercial are for the operationally commercial. The cost that we're bearing today, you're going to get a nice flow through on profits. Because you're bearing the cost of the capital and investing in the staff to support a much larger franchise in the business. And part of that is really associated with our Matrix.

We're tripling the size of the business and we really we need to invest in order to scale the business to the magnitude in which we plan to take it. So those are the things I would say And then if I could just maybe make one other comment, because it really impacted the quarter over quarter Q4 what happened in Q4 and where we are in Q1 vis a vis. Sort of EBITDA margins. Repairs and maintenance, we spend about 50 on average about $50,000,000 a Again, that's an average In Q4 of twenty twenty four, we took our repairs and maintenance We wanted to get at the front end of it. And that increased to $83,000,000 in the fourth quarter. As a result, when you look in the first quarter, we're stepping back down to roughly the $50,000,000 mark. And so there's a $30,000,000 swing quarter over quarter. In the amount of maintenance that is being done inside the assets we come to the back end of 2025, again, we'll make some decisions about timing and the like. But we sometimes you make the decision to accelerate costs or push them out depending on the circumstances. But what I wanted to leave everybody with is when you look at the first half of the year, you see meaningful step up in Q2 margins over Q1.

But what you really see is the continued performance of the business for the second half of the year and as I said, at or near the 50% margin target, It just tells you about the operational efficiency that we're building into the business. And we haven't even spent the energy yet of talking about what it means to change the process and change the systems, which is a core priority that Adair has for myself and the team.

Thank you. Our next question comes from Nick DelDio with MoffettNathanson. Your line is open.

Hi.

Thanks for taking my questions. First, I want to talk a bit about capacity constraints I think a year ago you talked about there being capacity constraints in some key markets. That were crimping sales and you opened facilities over the course of twenty four to address that. Adair, you noted in your prepared remarks that bookings could have been better absent capacity constraints in some key markets. So it seems like that issue has cropped up again. I guess by when do you feel like you'll be ahead of the ball on this front and unconstrained from an inventory perspective across at least most of your key markets? [indiscernible] So we absolutely are [indiscernible] part of our Build Bolder strategy is ensuring that we're leaning into those capacity constraints that we see that we see in the market. [indiscernible] Our capacity constraints vary region by region around which of our Tier one are impacted by this. You would also see in the deck that we provided the expansion guide, which provides an indication of how much capacity we would be releasing in 2025 and how much will come into our inventory over the course of that year and the years that follow.

It's absolutely true that there are cases where we could not meet the contiguous capacity requirement of a customer in a Tier one metro. And if we had to have that capacity available, we could. Have met that demand for the customer. In most cases, we were fortunate to be able to demand shape or to move the in on a smaller basis. But certainly, we are right in the center, very firmly in the center of what is a very hot demand market at the moment. And the underlying signals continue to demonstrate the relevance of the product portfolio, the solution set, the global reach and so on that Equinix Equinix to offer. As I mentioned, Build Bolder is a strategy that is very much focused on our retail portfolio as well as aspects of our ex scale portfolio, which Keith has just covered. And our core focus when we think about this strategy is [indiscernible] can have a differentiated value creation for these retail campuses. Our intent is really to lean in here and to deliver retail capacity in an efficient manner as we can in order to meet customer demands. I mentioned in my prepared remarks that we have 62 major projects underway.

And our goal is really to enable our design and our construction team to streamline this build and bring larger critical retail capacity to the market faster for our customers, particularly in some of those key markets. So for instance, within our retail pipeline, we have created a pipeline review so that we can see where we have the opportunity to streamline the number of phases that will enable us to deliver this capacity And as a result of that, when we look at NY3 DC16 and LD4, these are all examples of projects that have been accelerated at least a year as a result of the build boulder lens that we are placing on the demand market that we the demand opportunity that we see and the opportunity that we have to provide that capacity through to our customers. So continuing area of focus for us continuing area of optimization and continuing engagement with our customer Great. That's helpful. Can I ask one more The fiber market There's obviously a lot of demand or a lot of activity for fiber to support AI? Dark fiber, wavelengths, new routes being constructed, You alluded to some wins with Zayo in your prepared remarks as an example of that.

Do you think that this source of activity is going to be large enough to be a meaningful incremental driver of the business in coming years? So I'd imagine a lot of it is going to to terminate in your facilities.

That's quite possible. I mean, we're certainly seeing that with the Zayo partnership. The opportunity to support their journey. And again, I would just Back to the unique differentiation and value proposition of Equinix Equinix, [indiscernible] densely interconnected, and dense with network service providers. And these are all elements that will be crucially important as we look to capitalize on future opportunities. Thank you. Our next question comes from Michael Rollins with Citi. Line is open.

Thanks and good afternoon. Daryl, you mentioned earlier some of the work you've done on segmentation. And so curious if you can give us an update as to where do you see Equinix being under penetrated in certain key customer verticals And if you can give us an update as you look at the 2025 guidance with respect to two paths, So So one path is as you look at constant currency revenue growth of 7% to 8% in the guide, How do you think about that in terms of expanding customers? Versus expanding customer spend And then on the second half, how do you think about that in terms of the cabinet growth versus the pricing and MRR per cabinet expansion.

Thanks.

Thanks, Mark. And I'm just just jotting down the three elements of your question there to make sure that I address them. So we undertook a very comprehensive segmentation exercise Looking at our customer base, and looking at the customer base through a variety of different lenses And the first output of our segmentation exercise is really to define where and how we best serve these customers. So with what kind of account coverage, what kind of account management, what kind of cost to serve. And that's really been the first focus of our segmentation ex our operational efficiency and our operational effectiveness internally. That being said, it does give you an opportunity then to take your segmentation of your customers and look at it through the lens of the TAM, the total available TAM in the market. And to see where we are and how we are actually covering various different segments. We have a very balanced portfolio across industry. So it would be hard to point to an industry where we don't have a representation But I think that our reach into accounts that are smaller in terms of revenue turnover and might fall into that general business type category is harder.

Our focus has very much been on enterprise customers. And that's really where your channel begins to play. And that's really where you can have a digital sales motion in order to to make that reach possible. I also mentioned in my prepared remarks that one of the one of the things that we had done as a result of our implementation this year was to make some amendments to our compensation plans. And one of the amendments that we have made to our compensation plans is actually around net new name acquisition. So how the team not only expands the footprint in an existing account, but to your point enable us to actually expand the number of customers that Equinix Equinix So we should see an uptick in that number during the course of this year based on based on that focus. And then the last question was relevant to cabinets. Sorry, Mike, you might need just to remind me if that's part of your question. Sure. So as you look at the constant currency revenue guidance 7% to 8%, How do you think about the contribution from cabinet growth versus pricing and MRR growth? MRR per cabinet growth? [indiscernible] Michael, maybe I'll take that and then Derek can sort of jump in First, I think it's important to really understand just where we are on the growth rate year over year.

And as I said, there's a little bit of probably noise in the fourth quarter, noise in the guidance. So let me explain that.

So the fourth quarter we know currencies the currency has impacted us both from revenue all the way down to the bottom. As it related to the fourth quarter, it was $22,000,000 There's also $22,000,000 of non recurring fees that we were anticipating to close in Q4 that did not close. And so that would have put us to the top end of the guidance range. That That will happen in Q1. In fact, the vast majority of has already happened in Q1. So that's good.

So then when you start to think a little bit about the growth rate for 25 over '24, There's I want to reconcile how we got to the $7,000,000 to $8,000,000 There's $147,000,000 of FX And so Everybody can take a view on it. Are we going to continue to have dollar strand throughout the rest of the year? Reduced power costs of roughly $50,000,000 impact of metal reducing $45,000,000 and then fit out costs in the ex scale franchise, which we typically don't do, but we we're outside of the JV for a couple fit outs just based on the structure, that's a $40,000,000 reduction. So when you look at that, overall, you see how the business is performing. Having said all of that, so when you look at just the fundamental business, we absolutely anticipate that you'll see increased gross bookings that will come from higher density or I should say continued higher density That higher density, of course, does good things for the cabinet. [indiscernible] But how it presents itself and the number of cabinet adds into the system is still to be determined. In my prepared remarks, given the backlog, given we know when we think the inventory is [indiscernible] We have what we think is good visibility into continued cabinet adds into 2025.

There'll be some aberrations with some churn, but we'll always guide you to that. That's how I think about that. As it relates to pricing, we think again in 2025, we'll have positive or net positive pricing actions that will represent about 10% of our gross bookings How that presents itself on a stabilized basis, we still envision 3% to 5% price growth on our stabilized assets. And again, that comes from it does come from price but it also comes from volume. More cross connects as Adair alluded to. So hopefully that gives you a little bit of sense of what's happening. If I can just maybe say one other thing because I think it's important As you look at Q1, the difference between Q1 and Q4 the lion share of the degradation is $40,000,000 is coming from So it gives you a sense And then $30,000,000 is coming from lower non recurring non recurring fees. But as I told you, moved $20,000,000 so it would have been $50,000,000 So it gives you a sense there's a lot of noise between Q4 and Q1. And how that's impacted to the year. But we're really probably as you heard from Adia, we're really excited about where we are, the positioning and we can see where the inventory is going to come online and allow us to sell more more to the customer over that over the year.

And the customers consuming, the average deal size is just getting bigger. It's getting more Dan's and it's getting larger. And that goes back to maybe part of what Nick was asking, The debt we're selling out some of the core assets faster than we anticipated and we need to put more assets up as fast as we can. Despite the constraints in the marketplace. Thanks very much. Thank you. Our last question comes from Jim Schneider with Goldman Sachs.

Your line is open.

Good afternoon and thanks for taking my question.

I was wondering if you could sort of comment on sort of the revenue trends you're underlying revenue decelerated by about 100 basis points last year and you're guiding to another 50 basis point deceleration, if I'm not mistaken, 780% heading into 2025. I guess, can you maybe comment on what the recurring revenue outlook is doing for 2025 all in? And then what is your confidence level of the you can actually reaccelerate that revenue growth over the course of the year and what would be the drivers of that?

I'll take a first stab and then I'll have perhaps Keith decompose some of the numbers for you. So I think the guide that you see for 2025, that's very much in line with our performance from 2024. And implied in this guidance is a step up, as you've mentioned, of recurring revenue growth over the course of giving us a very implied strong exit into 2026. That recurring revenue growth step up is 28 mill in $28,000,000 in Q1 and then stepping up during the course of the year into a 40 mill type category for our recurring revenue. I'm really very happy about that because this core recurring revenue element is a key element of our business. And allows us to plan and consistently grow As I mentioned already, I think we're very firmly in the center of demand. And have a very strong backlog to support this revenue. And continue to see this very clear and compelling signal from the market. So we very much look forward to taking the gross bookings and the records that you've seen over the course of 'twenty four. Taking that and turning it into revenue as quickly as we possibly can in order to ensure that we have that strong exit out in 2026 And of course, doing that whilst we're delivering 190 basis points of margin expansion.

So not just profitable context. Keith, is there anything that you wanted to do on the mechanics of where that's at? So Jim, maybe just to summarize, what Adair said that, so that growth is all basically coming from the recurring line. Which is and so non recurring revenues as we look to '25 is going to be flat, I would say generally flat And so all that growth is coming from the recurring line. And then going just reminding everybody, it's really important and Ralph knows this better than anybody as well as If we had more inventory in the fourth quarter, we would have sold more. Our backlog is at near an all time high. We just have to make sure that we can continue to deliver the capacity into the market and that gives you the ability to continue to accelerate the top line. And thanks. Maybe just as a follow-up question. There's been a lot of announcements in the market whether that is Stargate or otherwise, about significant capacity additions over the next few years. So I was wondering if you could comment relative to your own XGIL JV with CPP and GIC, going forward, anything makes you feel differently about the pace with which you're going to add that capacity via the JV?

Is there anything you can do to actually accelerate that capacity addition further to bring it online per your earlier comment? [indiscernible] So in terms of some of the announcements that we've seen, obviously, this is a continued focus on the data center industry. And as I mentioned earlier, we're very central to that. So we're very supportive of announcements like this because we feel that all boats can rise on that particular tide. In terms of how this relates to our own plans, we of course have seen from the hyperscalers continued investment in their own CapEx stories from their recent earnings announcements. So it doesn't seem that there is any desire to step away from this in the short term. So we feel that there is a lot of opportunity in the market for us to pursue. As we've mentioned already, we're at 85% lease and pre leased on the projects that we have already in pipeline. Under XScale, looking across The Americas to find those next sites outside of the of the Hamptons, the one that we have begun to work and develop the site. So we remain very focused on ensuring that we can capture as much of this opportunity as possible.

The second phase or the second part of Bill Bosser because it is an and strategy is focused on our ex scale pipeline and how we execute against that pipeline and deliver that capacity a fast to the market. Thank you for joining our Q4 earnings call. This concludes our commentary.