Digital Realty Trust, Inc. Q2 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

Key Highlights

  • Recorded $164 million in new leasing for Q2, one of the strongest quarters in company history. Combined with Q1, this produced a record first half for leasing.
  • First-half 2024 leasing was up more than 100% compared to first-half 2023.
  • Strong demand across all segments, including record performance in the 0–1 MW and interconnection categories.
  • Data center revenue grew 13% year-over-year when adjusting for capital recycling activity.
  • Fee income from hyperscale private capital ventures increased 26% year-over-year in the first half.
  • Record commencements in the quarter totaling $176 million, supporting accelerating top- and bottom-line growth through 2024 and into 2025.
  • Balance sheet strengthened: leverage reduced to 5.3x (below long-term target), supported by over $2 billion in equity raised and $0.5 billion from asset transactions.
  • Expansion into London with acquisition of a highly connected enterprise data center campus.

Financial Performance

  • Core FFO: $1.65 per share in Q2.
  • Rental plus interconnection revenue up 5% year-over-year; up 13% pro forma for capital recycling.
  • Adjusted EBITDA up 5% year-over-year.
  • Same-capital cash NOI up 2% year-over-year; 3.5% year-to-date.
  • Renewal leasing: $215 million at +4% cash rent spreads; year-to-date spreads +8.2%.
  • Churn well-controlled at 1.6%.

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Operator: Good day, and welcome to the Digital Realty Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Jordan Sadler. Please go ahead. Jordan Sadler: Thank you, operator, and welcome everyone to Digital Realty's second quarter 2024 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, Colin McLean, are also on the call and will be available for Q&A. Management will be making 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 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 second quarter. First, we continue to execute within a very favorable demand environment with $164 million of new leasing executed in the quarter, again marking one of the top quarters in our history, which together with last quarter's record le

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