Digital Realty Trust, Inc. Q1 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Company Performance Overview

  • Revenue, adjusted EBITDA, and AFFO grew sequentially, marking a solid start to 2023 despite global uncertainty.
  • Total revenue increased 19% year-over-year and 9% sequentially (13% YoY excluding utility reimbursements).
  • Interconnection revenue surpassed $100 million for the first time and grew 5% sequentially.
  • Core FFO was $1.66 per share, up $0.01 sequentially and slightly below prior year levels; constant currency FFO was $1.69 vs. $1.67 last year.
  • Stabilized same-capital cash NOI increased 3.4% year-over-year (vs. 1Q22), helped by positive re-leasing spreads and better occupancy.

Leasing and Demand Trends

  • Total new leasing: $83 million.
  • 0–1 MW + interconnection represented 57% of bookings; EMEA nearly matched record levels.
  • Interconnection bookings reached record levels.
  • Greater than 1 MW leasing moderated to $35 million this quarter (vs. a record 2022 of $370 million), largely due to no new deals in Northern Virginia amid power constraints.
  • Backlog of signed-but-not-commenced leases: $434 million.
  • Churn remained low at 1.1%; 122 new customers added in the quarter.

Pricing and Re‑Leasing Spreads

  • Re-leasing spreads increased 4.5% on a cash basis — the strongest since early COVID.

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Operator: Good afternoon, and welcome to the Digital Realty First Quarter 2023 Earnings Call. Please note, this event is being recorded. [Operator Instructions] I would like to turn the call over to Jordan Sadler, Digital Realty’s Senior Vice President of Public and Private Investor Relations. Please go ahead. Jordan Sadler: Thank you, operator. And welcome, everyone, to Digital Realty’s First Quarter 2023 Earnings Conference Call. Joining me on today’s call are President and CEO, Andy Power; and CFO, Matt Mercier. Chief Investment Officer, Greg Wright; Chief Technology Officer, Chris Sharp; and Chief Revenue Officer, Corey Dyer are also on the call, and will be available for Q&A. Management may make forward-looking statements, including guidance and underlying assumptions on today’s call. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC. This call will contain certain non-GAAP financial information. Reconciliations to net income are included in the supplemental package furnished to the SEC and available on our website. Before I turn the call over to Andy, let me offer a few key takeaways from our first quarter. First, our customer value proposition is resonating as we delivered yet another strong quarter of nearly $50 million of leasing in our zero to one plus interconnection

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