Publicly listed data center colocation companies including Digital Realty and Equinix have published their Q4 2023 quarterly earnings results.

Digital saw its revenues decrease slightly from Q3 and more than 10 percent year-on-year. The company sold its option on a piece of land in Sydney, Australia; and acquired previously leased land in Paris, France. The company also exercised an option to purchase a Cyxtera data center on the Slough Trading Estate outside London, UK.

Equinix’s xScale hyperscale business saw a record quarter, leasing 90MW. CEO Charles Meyers said the company was looking to expand the business into the US. The colo firm also acquired a site in London it previously leased.

Iron Mountain secured a relatively modest 4MW in new leases, but ended the year well ahead of its original target. The company is targeting 100MW in 2024.

American Tower saw slight revenue growth for the quarter and is targeting revenues of $900 million for 2024.

DigitalBridge said it is forecasting data center CapEx of $11 billion in 2024.

Digital Realty: Revenue decreases

Digital Realty reported revenues of $1.4 billion in the fourth quarter of 2023, a two percent decrease from the previous quarter and an 11 percent increase from the same quarter last year.

The company delivered net income of $20 million in the fourth quarter of 2023, and Adjusted EBITDA of $700 million in the fourth quarter of 2023, a two percent increase from the previous quarter and a nine percent increase over the same quarter last year.

"Our fourth quarter results marked the culmination of a transformative year for Digital Realty. We delivered on our strategic priorities and positioned the company for the growing opportunity that lies ahead," said Digital Realty president and CEO Andy Power. "During the fourth quarter, we bolstered and diversified our capital sources through the formation of two new development joint ventures, while continuing to evolve our portfolio to capture the tremendous opportunities created by AI."

The quarter saw Digital with bookings that are expected to generate $110 million of annualized GAAP rental revenue; more than half of that was in EMEA (and largely within the above 1MW segment) – though globally sub-1MW deals totaled just under $40 million. The company also signed renewal leases representing $210 million of annualized rental revenue during the quarter.

Additionally, Digital Realty completed the sale of an option maintained on a second parcel of land in Sydney, Australia with an area of 21 acres for approximately AU$29 million (US$20m).

Digital Realty exercised its option to purchase approximately 19 acres of land in Paris, France, for approximately €70 million ($77m). The parcel of land, previously leased to Digital Realty, is currently under development to support up to 77MW of IT load.

The company also closed on a previously announced acquisition of approximately three acres adjacent to its existing campus near Athens, Greece for approximately €6 million ($6m).

Digital Realty has exercised a previously announced option to purchase a Cyxtera data center on the Slough Trading Estate outside London, UK.

GI Partners also executed its option to acquire an additional 15 percent interest in two stabilized data center buildings in Chicago, Illinois. GI increased its interest from 65 percent – acquired last year – to 80 percent, resulting in approximately $68 million of gross proceeds to Digital Realty.

For 2024, Digital is predicting total revenues of $5.55-5.65 billion and Adjusted EBITDA of $2.8-2.9 billion. The company has a backlog of $495 million, two-thirds of which is set to commence this year.

CapEx for 2024 is set to be between $2-2.5 billion. Digital Realty had approximately $17.4 billion of total debt outstanding as of December 31. Less than $1 billion of this is maturing in 2024.

During the earnings call, CEO Power said the company is in “active negotiations with a handful of customers” for substantially all of its capacity in Virginia’s Loudoun County – currently totaling around 100MW – but said nothing has been finalized just yet.

On acquisitions, Power said the critical puzzle pieces have been “picked over” and any future M&A would be “bolt-ons” to the core platform.

“I don't see any like key gems out there that would be really additive to our global platform at peak,” he said.

Equinix: Leases 90MW of xScale hyperscale capacity, expansion into US coming

For Q3 2024, Equinix posted revenues of $2.11 billion, up 2 percent on the previous quarter and up 10 percent year-on-year. Q4 revenue includes a negative foreign currency impact of approximately $23 million.

Adjusted EBITDA was $920 million, down 2 percent on Q2 but up 10 percent YoY (including a $12 million negative foreign currency impact). Net Income was $228 million.

"2023 was another strong year for Equinix—we delivered more than $8 billion of revenues, achieving an amazing 21 years of consecutive quarterly revenue growth, all while driving AFFO per share performance above the top end of our long-term expectations,” said Equinix CEO Charles Meyers. “We made substantial progress on our ambitious agenda, positioning the business to capitalize on the immense opportunities that lie ahead."

In Q4, Equinix purchased the company's London LD8 data center – it had previously been owned by Blackstone and terms weren’t shared. DC16 in Washington DC, FR13 in Frankfurt, KL1 in Kuala Lumpur, and SL4 in Seoul launched during the quarter.

The company had a record period around its xScale hyperscale business, leasing 90MW. During Q4 and into Q1 2024, Equinix leased 5MW at the now-open Madrid 3x-1 and 5MW at the upcoming 3x-2; 10MW at Madrid 4x-1; 5MW each at Milan 7x-1 and 7x2, as well as 10MW at Milan 7x-3; 5MW each at Warsaw 4x-1 and 4x-2, as well as 10MW at Warsaw 4x-3; and 10MW at Tokyo 13x-2.

Newly-approved expansions include DA11 phase 3 (Dallas, Texas – 900 racks coming Q2 2025); DC22 phase 1 (Washington DC – 2,000 racks coming Q2 2025); and LG2 phase 3 (Lagos, Nigeria – 275 racks coming Q1 2025).

When asked about AI and the company’s new cloud partnership with Nvidia during the earnings call, CEO Myers said it “was a major factor” in the quarter’s xScale leasing. Myers also confirmed that the company is looking at bringing its xScale facilities to the US.

“We are absolutely working on how we're going to continue to be more aggressive in this market,” he said. “We think there is opportunity...and I think we're positioned to really continue to get some significant, both economic and strategic, benefits by advancing our investment in that. And so, we're hard at work on that. Nothing specific to report here, but I think you'll hear from us in the near future on that.”

He also added that any US hyperscale expansion would primarily be focused on organic growth, rather than acquisitions.

“I think we're very focused right now on organic,” said Myers. “We wouldn't necessarily not be open to inorganic. I just think it's a tougher thing in terms of identifying those assets.”

The company is projecting total 2024 revenues of $8.79-8.89 billion and Adjusted EBITDA of $4.09-4.17bn. Equinix’s CapEx for 2024 is expected to reach $2.57-2.8 billion.

Iron Mountain: Quiet quarter ends successful year

For Q4 2023, Iron Mountain’s data center unit posted total revenues of $137.1 million and Adjusted EBITDA of $58.2 million. The previous quarter saw the company’s data center business post revenues of $127.5 million.

For 2023 as a whole, Iron Mountain’s data center revenue was $495 million and Adjusted EBITDA of $215.9 million.

Total company revenues for the fourth quarter were $1.4 billion, up 11 percent compared with $1.3 billion in the fourth quarter of 2022. Net Income for the fourth quarter was $29.2 million, compared with $125.7 million in Q4 2022. Adjusted EBITDA for the fourth quarter was $525.2 million, compared with $471.9 million in the fourth quarter of 2022, an increase of 11.3 percent.

"We are pleased to report outstanding performance in both the fourth quarter and the full year, again resulting in all-time record Revenue and Adjusted EBITDA," said William L. Meaney, President and CEO of Iron Mountain. "We are well positioned to continue our growth trajectory in 2024, which is reflected in our financial guidance for double-digit revenue growth."

The company leased 4.5MW during Q4 across 122 deals. The company signed 156 renewals totaling 7.9MW.

In the earnings call, the company said it had signed a seven-year agreement to provide capacity at its New Jersey data center for an ‘automated trading technology company’ that is expanding in the US; a cloud provider in the US, and a ‘major bank’ in India at its Mumbai facility.

The company also managed the decommissioning of more than 40 data centers globally, and won a data center decommissioning contract from a US financial institution.

For the year, IM’s data center business leased 124MW across 2023; well above its original 80MW target. The company is projecting new and expansion leasing of 100 megawatts for 2024

“We continue to be pleased with the growth trajectory of our data center business, which has only accelerated with the rapid adoption of AI-enabled services,” CEO Meaney said during the earnings call. “We are pleased to have signed 124 megawatts well ahead of our initial plan for the year. We continue to see tremendous opportunity in serving both hyperscale and co-location customers and significant growth potential for our footprint.”

The company now has 255.4MW of capacity in operation across 26 facilities. Utilization rates are at 95.5 percent. The quarter saw the 10MW VA-3 in Virginia enter service, along with the 9MW LON-3 in London; both are fully leased.

Data center CapEx for the years was $965.1 million. For 2024, total growth CapEx is forecasted to reach approximately $1.35 billion – the company said the “majority” would be in data centers.

American Tower: Slow data center growth

American Tower, which owns US operator CoreSite, posted data center revenues of $215 million and profit of $107 million. For comparison, Q4 2022 data center revenue was $198 million, while Q3 2023 revenue was $212 million.

For the year, the company posted data center revenues of $835 million and $415 million profit.

Total company revenues were $2.787 billion, up $82 million on Q4 2022. Adjusted EBITDA for the quarter was $1.761 billion.

Steven Vondran, American Tower CEO, said: “We delivered another year of solid results at American Tower. In 2023, we combined record colocation and amendment growth in the US & Canada and a second consecutive year of record sales at CoreSite, with resilient performance in our international markets. Looking to 2024 and beyond, technology evolutions such as 5G, AI and the requirement for more distributed compute workloads are expected to drive tremendous demand for our communications infrastructure assets.”

For 2024, the company is projecting data center revenue of $900 million to $920 million. Data center CapEx is expected to reach $450 million.

When asked about the possibility of international expansion of the data center business during the earnings call, CEO Vondran said it's “not something we're leaning into at this point.”

“We do have customers that would love for us to have a larger footprint than we do today. And we'll consider those opportunities. But there's nothing that I would point to today to say that we're going to do anything outside the US in the near term,” he said.

On AI, Vondran said the company is seeing AI inferencing “pick up” in the company’s facilities and exploring near-term opportunities around AI at the Edge for specific use cases.

“We have a number of POCs that we're working on with various partners that are more niche applications in particular. I think the micro data centers at the base of the towers, facilitating AI is still a little bit further out,” he said.

DigitalBridge: $11 billion in data center CapEx in 2024

For Q4 2023, DigitalBridge reported $100.6 million net income attributable to common stockholders., and Adjusted EBITDA of $31.985 million.

“We had a strong finish to 2023 with the best quarter in investment management fees and fee-related earnings since we assumed leadership at DigitalBridge. Following the successful deconsolidation of our Operating segment in the fourth quarter, today we are a simple, profitable, and fast-growing alternative asset manager, well-positioned to continue scaling our platform in 2024 to meet the AI-led demand for digital infrastructure,” said Marc Ganzi, DigitalBridge CEO.

In the earnings presentation, DigitalBridge said it currently owns more than 190 data centers in more than 80 markets worldwide, and has a five-year pipeline of more than 5GW.

Company CapEx for data centers in 2024 is set to reach $11 billion.

During the earnings call, CEO Ganzi said the company is targeting more than $7 billion in fresh capital and could reach 2GW of data center leasing across its portfolio of companies.