Digital Realty Trust, Inc. Q3 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Digital Realty reported a strong Q3 2023, highlighting record leasing activity, multi-year highs in pricing, and significant balance sheet improvements.
  • Same-capital cash NOI rose 9.4% year-over-year, the best performance in over a decade (compared to high‑3% growth entering 2023).
  • Re-leasing spreads reached 7.4% on a cash basis, the highest since 2015 (compared to low-single-digit expectations earlier this year).
  • Interconnection revenue hit a record $107 million, up 12% year-over-year and the strongest growth since 2018.
  • Leverage declined to 6.3x (from 6.8x in Q2 and nearly 7x at the start of the year).

Leasing Highlights

  • Total new leasing: $152 million.
  • Record 0–1 MW + interconnection bookings: $54 million (+9% QoQ, +28% YoY).
  • Greater than 1 MW leasing: $97 million, highest since the company tightened capital allocation criteria a year ago.
  • Backlog of signed-but-not-commenced leases: record $482 million.
  • Added 117 new customers, marking 3.5 years of 100+ new logos per quarter.
  • Churn remained low at 1.1%.

Demand Themes

  • Strong global demand across cloud, digital transformation, hybrid IT, and emerging AI workloads.
  • AI demand is still in early stages but accelerating. Example: deployments supporting 32,000 NVIDIA H100 GPUs.

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Operator: Good afternoon, and welcome to the Digital Realty Third Quarter 2023 Earnings Call. Please note, this event is being recorded. [Operator Instructions] And we'll aim to conclude at the bottom of the hour. I would now like to turn the call over to Jordan Sadler, Digital Realty's Senior Vice President of Public and Private Investor Relations. Jordan, please go ahead. Jordan Sadler: Thank you, operator, and welcome, everyone, to Digital Realty's third 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, Colin McLean, 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 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 third quarter. First, our customer value proposition continues to resonate. Leasing was strong across both our primary prod

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