Powering the Interconnected World Analyst Investor Day

Transcription

1 Powering the Interconnected World Analyst Investor Day Steve Smith CEO & President 2014 Equinix Inc.

2 Agenda 1 Company Positioning 15-Year Journey Global Interconnection Platform Strategic Priorities Market Leadership 2 Market Adaptability 3 Ecosystem Development Growth Opportunity Trends Driving Traffic to MultiTenant Data Centers Cultivating Ecosystems Total Addressable Market Network Effect Customer Workloads Migrating to Hybrid Cloud Financial Platform Revenue Growth Outlook Cloud-Enabled Enterprise Centrality of a Data Center as a Strategic Asset Financial Management 5 Capital Allocation Financial Performance Culture of Adaptation Vertical Growth Opportunity Investment Thesis Network: Revenue Center Financial: Market Access Product Innovation Continuum Content: Global Reach Enterprise: Performance Hub Go-to-Market Evolution 2014 Equinix Inc. 4 Cloud: Private Access 2

3 15 Year Journey Investment Equinix Financial Performance ($M) > 2,395 Revenues Adjusted EBITDA ~$7 billion of organic and M&A investment since inception Growth CapEx & Real Estate M&A > 1,105 Over 10 years of revenue and EBITDA growth Profitability Adjusted EBITDA margins of 46% E (600) Adaptability Continuously evolving the business strategy to capture emerging opportunities Note: FY 2014 guidance as announced on Form 8-K filed on April 30, This does not constitute an update or reiteration of such guidance Equinix Inc. 3

4 Global Interconnection Platform Customer Ecosystems Global Footprint Interconnected ecosystems 4,500+ customers with 130K+ cross connects Unmatched global scale and reach 101 data centers in 32 metros across 15 countries Networked Data Centers Business Reputation Foundation of network neutrality and density 975+ network service providers Operational excellence reliability / customer experience and financial strength Note: As of Q Equinix Inc. 4

5 Strategic Priorities 1. Deepen existing and seed new ecosystems 2. Align and focus global Sales & Marketing engine 3. Invest meaningfully in innovation 1 2 Differentiated Growth Organizational Effectiveness 1. Drive global consistency, alignment and focus 2. Increase talent density 3. Improve cost productivity 3 Capital Allocation 1. Prioritize growth capital 2. Optimize capital planning 3. Execute REIT strategy 2014 Equinix Inc. 5

6 Market Leadership The stronger our market leadership the more powerful our economic engine FOCUS: Market Leadership We measure ourselves with metrics indicative of customer value ecosystem development, interconnection density and global reach Our historic capital allocation decisions have focused on strengthening our global interconnection platform We will continue to invest to grow our customer base, brand and global footprint to build a historically significant company RESULTS: Economic Engine Faster revenue growth Higher operating margins Greater capital velocity Higher targeted ROIC 2014 Equinix Inc. 6

7 Agenda 1 Company Positioning 15 Year Journey Global Interconnection Platform Strategic Priorities Market Leadership 2 Market Adaptability 3 Ecosystem Development Growth Opportunity Trends Driving Traffic to MultiTenant Data Centers Cultivating Ecosystems Total Addressable Market Network Effect Customer Workloads Migrating to Hybrid Cloud Financial Platform Revenue Growth Outlook Cloud-Enabled Enterprise Centrality of a Data Center as a Strategic Asset Financial Management 5 Capital Allocation Financial Performance Culture of Adaptation Vertical Growth Opportunity Investment Thesis Network: Revenue Center Financial: Market Access Product Innovation Continuum Content: Global Reach Enterprise: Performance Hub Go-to-Market Evolution 2014 Equinix Inc. 4 Cloud: Private Access 7

8 Trends Driving Traffic to Multi-Tenant Data Centers CAGR : 21% 7.5 Zettabytes / Year % Cloud Data Center (35% CAGR) 46% 54% 31% Traditional Data Center (12% CAGR) E Source: Cisco Global Cloud Index Report Equinix Inc. 8

9 Customer Workloads Migrating to Hybrid Cloud CAGR : 25% 137 Public Only Cloud IT Spend ($B) 56 Hybrid Private Only E 2014 Source: Cloud IT Spend IDC Public IT Cloud Services Forecast August 2013; IDC Private Cloud Services Forecast December 2012; Public, Hybrid & Private Cloud Adoption RightScale State of the Cloud Report Equinix Inc. 9

10 Centrality of a Data Center as a Strategic Asset Where Equinix Plays Buyers: Enterprises Financial Services Energy & Utilities Business & Pro Services Healthcare & Biosciences Performance Acceleration Sellers: Service Providers Improved User Experience Mobile Networks Revenue Growth Global Reach Wireline Networks Cloud Content & Digital Media Vendor Choice Total Cost of Ownership Service Reliability Execution Agility Data Sovereignty IT Security Sustainability 2014 Equinix Inc. 10

11 Product Innovation Continuum Customer Value Creation Customer Value Migration from a product to a solutions focus with an emphasis on customer value Performance Acceleration Interconnection Offer Development Integrated Solutions Creation of Performance Hub and Cloud Exchange repeatable solutions for enterprises Colocation Performance Acceleration Equinix Enabled Solutions 2014 Equinix Inc. Enabling customers to address the challenges of the cloud / network centric world 11

12 Go-to-Market Evolution WHO: Right Targets WHAT: Right Offers WHERE: Right Distribution Channels HOW: Right Sales & Marketing Execution Customer segmentation Predictive analytics for propensity to buy Shift from product components to solutions to business problems Clear, credible & quantifiable value propositions Direct sales to stimulate new markets and drive key relationships Multi-channel model to expand total addressable market Precise targeting Deep account planning Reduced sales drag Performance management Professional services to increase close rates 2014 Equinix Inc. 12

13 Agenda 1 Company Positioning 15 Year Journey Global Interconnection Platform Strategic Priorities Market Leadership 2 Market Adaptability 3 Ecosystem Development Growth Opportunity Trends Driving Traffic to MultiTenant Data Centers Cultivating Ecosystems Total Addressable Market Network Effect Customer Workloads Migrating to Hybrid Cloud Financial Platform Revenue Growth Outlook Cloud-Enabled Enterprise Centrality of a Data Center as a Strategic Asset Vertical Growth Opportunity Network: Revenue Center Financial Management 5 Capital Allocation Financial Performance Culture of Adaptation Investment Thesis Financial: Market Access Product Innovation Continuum Content: Global Reach Enterprise: Performance Hub Go-to-Market Evolution 2014 Equinix Inc. 4 Cloud: Private Access 13

14 Cultivating Ecosystems Enterprise Verticals E.g., Insurance, Healthcare and Oil & Gas Mobility Centers Facilitating mobile access and content Advertising Exchanges Improving online advertising bid rates Cloud Service Providers Accelerating enterprise adoption of hybrid cloud Financial Trading Enabling low-latency transactions Content Delivery Optimizing the delivery of digital content Network Peering Scaling the Internet 2014 Equinix Inc. 14

15 Network Effect Network to Network Peering Network to Non-Network Cloud & IT Services Content & Digital Media Other Enterprises Network & Mobility Network & Mobility Financial Services Frankfurt Metro Frankfurt Metro 216 network customers with 2,297 network to network peering cross connects 242 non-network customers with 2,767 cross connects to networks 2014 Equinix Inc. 15

16 Financial Platform Financial to Financial Financial to Non-Financial Network Financial Services Financial Services Cloud & IT Services Content & Digital Media Other Enterprises New York Metro New York Metro 282 financial customers with 5,645 financial to financial cross connects 75 non-financial customers with 5,094 cross connects to financial 2014 Equinix Inc. 16

17 Cloud-Enabled Enterprise Cloud Direct Connections Cloud to All Verticals Content & Digital Media Cloud & IT Services Non-Network Customers Other Enterprises Financial Services Cloud & IT Services Network Sydney Metro Sydney Metro 63 cloud customers with 196 cloud to non-network customer cross connects 67 network customers with 956 network to cloud customer cross connects Note: Cloud customers include AWS and Google Equinix Inc. 17

19 Total Addressable Market (TAM) Equinix Retail Colocation & Interconnection TAM ($B) 24 8% Bandwidth Provider Retail Colocation & Interconnection 16 10% Supply-side build-up of retail colocation and interconnection revenues for 500+ data center services providers Market Size 17 Carrier Neutral Retail Colocation & Interconnection Methodology 4% 8 CAGR 2017E Carrier-neutral retail colocation and interconnection TAM estimated at ~$11B; CAGR forecast for to be ~10% Cloud-Enabled Enterprise Incremental enterprise opportunity is not fully reflected in these estimates Source: Synergy Research Group & Equinix analysis Equinix Inc. 19

20 Revenue Growth Outlook Equinix Revenue Estimates Growth Rate From 2013 to 2017 we expect our CAGR to be at or above 10% faster than market ($B rounded) Incremental Upside CAGR 2014 (1) 2015 Capturing the cloudenabled enterprise opportunity will enable us to outperform the market growth rate 0% (1) FY2014 guidance of $2.395 billion as announced on Form 8-K issued April 30, This does not constitute an update or reiteration of such guidance Equinix Inc. 20

21 Vertical Growth Opportunity Other Enterprises 530 Recurring Revenues Performance Hub Cloud & IT Services ($B) Cloud Exchange 411 Content & Digital Media Other Enterprises Ad-IX Cloud & IT Services Financial Services Electronic Payments Content & Digital Media Network & Mobility Financial Services Mobility Network & Mobility Q Note: AWS and Google categorized as Content & Digital Media Equinix Inc. Q

22 Network: Revenue Center Verizon Global broadband, wireline & wireless service provider Deal Verizon deployed Private IP access nodes in 15 Equinix locations worldwide Tokyo Chicago New York Amsterdam Silicon Valley Hong Kong Benefit London Washington D.C. Paris Singapore Frankfurt Atlanta Los Angeles Dallas Provides Verizon s customers located in Equinix sites with secure, reliable and highperformance connectivity to Verizon s network Additionally, their customers can access hundreds of cloud providers located at Equinix Sydney Private IP nodes are expected to be a significant revenue source for Verizon 2014 Equinix Inc. 22

23 Financial: Market Access Chicago Mercantile Exchange top derivatives marketplace Deal Located the CME Globex trading hub on Equinix s London campus Benefit London Chicago New York Places CME s trading hub within close proximity to its leading electronic trading customers in Europe Enables its customers to achieve speed, cost and technology efficiencies Complies with new European market regulations on derivatives trading central clearing houses & data repositories 2014 Equinix Inc. 23

24 Content: Global Reach Tencent major Chinese Internet service portal WeChat customers Hong Kong Deal Deployed Tencent infrastructure with Equinix in Hong Kong with plans for future expansion in additional markets globally Benefit Tencent s WeChat instant messaging app has >100M users outside China Enables Tencent to extend its reach outside of China Optimize WeChat app performance distributed architecture & network route choice 2014 Equinix Inc. 24

25 Enterprise: Performance Hub Rockwell Collins US defense & aerospace company Deal Extends company wide area network (WAN) to a distributed Performance Hub architecture in 7 Equinix US metros Seattle Benefit Silicon Valley Washington D.C. Denver Dallas 4x reduction in latency from 46 ms to 7 ms 2x increase in throughput Atlanta 56% reduction in cost Miami 2014 Equinix Inc. 25

26 Cloud: Private Access Windows Azure Microsoft s global cloud platform Deal Tokyo Brings Azure ExpressRoute to 16 global markets inside Equinix with joint marketing and development Seattle Osaka Hong Kong Chicago Singapore Amsterdam Washington D.C. Silicon Valley Los Angeles London New York Benefit Enables Azure customers to directly connect in Equinix data centers Atlanta Dallas Sydney Sao Paulo The private connections optimize the security, reliability, speed and cost of accessing Azure s cloud platform globally Windows Azure is a top business priority for Microsoft 2014 Equinix Inc. 26

28 Capital Allocation Real Estate and IBX Expansion Prioritize ecosystem hubs and new growth markets Acquire real estate in key franchise metros Balance Sheet Management Target net leverage of 3-4x Adjusted EBITDA; remain flexible Convertible Note exchange for cash and shares; mitigate future dilution post-reit conversion Total Shareholder Returns M&A and New Markets Evaluate strategic and tactical acquisitions Explore new market expansion opportunities Capital Repatriation Share repurchase program currently active Sustaining dividend post-reit conversion 2014 Equinix Inc. 28

29 Financial Performance Equinix Financial Performance (1) CAGR Revenues: 25% Adjusted EBITDA: 28% ($M) >$2,395(2) Revenues $1,887 Adjusted EBITDA Margin 46% $1,566 $1,189 $878 $705 41% $ $ Guidance $2,153 Adjusted EBITDA 47% 46% 44% $722 $888 46% $1,001 46% >$1,105(2) Revenues: >11% Adjusted EBITDA: >10% (including major projects) Continued Growth Story Above market top-line growth $525 Emphasis on margin improvement & ROIC E Disciplined risk management (1) FY FY2011 results as reported in previously-issued financial statements. FY2012 results as revised. (2) FY2014 guidance as announced on Form 8-K issued April 30, This does not constitute an update or reiteration of such guidance Equinix Inc. 29

30 Culture of Adaptability Platform Expansion Product Innovation Go-to-Market Strategy Operational Improvement Management Evolution China Brazil Indonesia UAE Interconnection Solutions Offers Solution architects Professional services Channel partnerships Command of the business Equinix Customer One REIT conversion IBX operating standards Organizational alignment Talent density Executive incentives 2014 Equinix Inc. 30

31 Investment Thesis The data center is a strategic asset solving customer business challenges in a cloud centric world Equinix is the best expression of the multi-tenant data center growth theme: Capitalizes on powerful secular themes & the innovation of others Unique global assets very difficult to replicate Attractive financial attributes low churn & operating leverage High return on investment opportunities Experienced management team with track record of creating value #techtrends #winners #losers #whatnext? 2014 Equinix Inc. 31

32 Thank you 2014 Equinix Inc. 32

33 Innovating to Capture the Cloud Analyst Investor Day Ihab Tarazi CTO 2014 Equinix Inc.

34 Agenda 1 The Changing Cloud Landscape 2 The Equinix Strategy 3 Technology Innovation Cloud Disruption Performance Hub Interconnect Services Hybrid Cloud Multi-Cloud Customer Challenges Cloud Public & Private Access Cloud Exchange Global Footprint Technology Strategy Driving Cloud Adoption Product Portfolio Evolution 2014 Equinix Inc. 2

35 The Cloud is Redefining the Technology Landscape A fundamental shift from a build to consume model Cloud technology and services are fundamentally changing IT consumption model giving rise to new segment of Cloud Service Providers and Cloud IaaS PaaS SaaS BPaaS Private Hybrid Public creating risks & opportunities for traditional players Legacy IT Infrastructure Development platform Software applications Business processes Development Platform Software applications Business processes Software Applications Business processes Business Processes Manual processes Source: McKinsey 2014 Equinix Inc. 3

36 Enterprises Want the Benefits of the Cloud But one cloud does not fit all G5000 Enterprises are Moving to Hybrid Cloud Environments Enterprises Will Leverage Multiple Cloud Services 100% 90% 80% 70% 60% Cloud User Respondents Companies with 1,000+ Employees (N-855) Public Multiple Private 11% Multiple Public 15% No Plans 4% Single Public 13% Single Private 9% 50% Hybrid 40% 30% Private Hybrid Cloud 48% Multi-Cloud 74% 20% 10% 0% Source: NorthBridge Venture Partners and Bain Analysis Source: Rightscale State of the Cloud Report, Equinix Inc. 4

37 Enterprise Cloud Adoption has Challenges Enterprise customers face obstacles when adopting cloud services Enterprises Demand Consistent global performance (latency and reliability) Performance Matters! Performance High <80ms RTD Med <40ms RTD Low <20ms RTD <1ms RTD Agility in connecting to multiple cloud services Test CRM Virtual Desktop M2M Trading Achieve TCO targets, build vs. subscribe Backup Payments Gaming Application integration ERP Video Data security and control HRM Finance Advertising 2014 Equinix Inc. Source: Equinix 5

39 Performance Hub The Enterprise Foundation Rich WAN-node extensions deployed to gain proximity to networks, cloud service providers and end users What is Performance Hub? Extension of an enterprise network node Secure and reliable connectivity to network and cloud providers What are the Elements? Space and power Interconnection to networks and clouds Design and deployment services Hardware and software support (through partners) Carrier selection and contract management (through partners) What are the Benefits? Performance faster network and applications Network simplify, reduce Cloud ready directly connect to popular public clouds 2014 Equinix Inc. 7

40 Transforming Cloud Connectivity Dynamically linking enterprises to the cloud ecosystem Access Cloud via Public Internet Access Cloud via Equinix Cloud Exchange Easy to connect (DIY) Single network interface Supports multi-cloud Globally available Less reliable Less secure Less control Lower performance Lower throughput Easy to connect (Portal, APIs) Single network interface (single port) Supports multi-cloud (multiple Virtual Connections) Globally available More reliable More secure Better control Higher performance Higher throughput 2014 Equinix Inc. 8

41 Equinix Cloud Exchange Enabling simple, scalable one-to-many private connections to the cloud Network Platform Layer 2 Ethernet 1G and 10G port options Single port to multiple cloud providers on separate virtual circuits (VC) Service Orchestration Portal for real-time VC provisioning and management API integration into network and cloud service providers for authentication and provisioning Coming soon! Customerfacing API integration for VC provisioning 2014 Equinix Inc. 9

43 Equinix Interconnect Services Internet Exchange Public Border Gateway Protocol (BGP) peering platform Cloud Exchange and Ethernet Exchange Private Ethernet service exchange Cloud networks are securely connected to end user networks maximizing performance Internet Exchange Cloud Exchange Ethernet Exchange Metro Connect Metro Connect Extend cross connect reach to other in-metro IBXs Fiber Cross Connects High-speed optical interconnect CSP NSP Enterprise Fiber Cross Connects 2014 Equinix Inc. 11

44 Equinix Global Exchange Footprint Key Facts Hong Kong Singapore Tokyo Sydney Seattle Silicon Valley Los Angeles Chicago Dallas Miami Toronto New York DC Metro Atlanta London Amsterdam Paris Frankfurt Geneva Zurich 19 Internet Exchange Markets (Layer 3) 673 unique customers 2,014 total ports 2.19 terabytes of global peak traffic 17 Ethernet Exchange Markets (Layer 2) 8M+ lit buildings <30 microseconds latency Normalizes 38 different Ethernet services 2014 Equinix Inc. 12

45 Distributed Exchange Simplifying enterprise interconnection across the metro Application Level Performance Private IP, Public IP and L2 Ethernet interconnect services Guaranteed performance, throughput and separation for traffic flows Cost Effective and Scalable Distributed switching architecture Dense metro optics Support 10G 1TB speeds Flexible, High-Performance Platform Zero-touch deployments Simplified backup and restoration procedures Six 9s of availability 2014 Equinix Inc. 13

46 Next Generation Network Fabric Create new intelligent interconnection for cloud access Platform Provides a Unified Fabric for All Services Dynamic and centrally controlled via SDN Large-scale platform, supporting high-speed interconnections Distributed switching across in-metro IBX data centers Supports new functionality for multi-network/multi-cloud exchange Enables virtualization, user control and automation via APIs Equinix Programmable Network Software Defined Network Control Layer Vendor Adaptors NSPs Metro CSPs Enterprises 2014 Equinix Inc. 14

47 APIs and Portal Providing direct access to the cloud easy, real-time and scalable APIs Cloud Exchange Portal Equinix Cloud Exchange Portal Network Service Provider API API Cloud Service Provider Leverages Ethernet Exchange platform and expertise Equinix manages API mapping sparing customers from reacting to multiple API updates Normalized interface End Customer Process 1. Select location and cloud provider 2. Select virtual circuit speed 3. Enter cloud service key or service identifier 4. Virtual circuit provisioned in five minutes 2014 Equinix Inc. 15

48 Cloud Exchange Deployment Hong Kong Singapore Tokyo Osaka Silicon Valley Seattle Los Angeles Chicago Dallas London New York Washington D.C. Atlanta Paris Amsterdam Frankfurt 19 Markets Available for Cloud Exchange by End of Year AWS and MSFT available today in SV, DC and London Expanding to 16 with MSFT (committed) and 7 markets with AWS (targeted) by end of 2014 Sydney Melbourne Future Expansion to All Markets Sao Paulo Cloud Exchange 2014 Equinix Inc. 16

49 Cloud Exchange Acceleration Driving momentum through partnerships, solution innovation and market development Market Development Broad market awareness program Develop test and use cases Launch Customer Cloud Innovation Market Awareness Use Cases, Case Studies Build Cloud Community Business Development Establish critical mass with top 20 Develop go-to-market programs with key partners Account Penetration Secure Sponsorship Development and Testing Launch / Scale Solution Innovation and Development Developed and enhanced Layer2 and Layer3 Interconnect Establish API s for Intelligent Interconnect Cloud Exchange 1.0 Cloud Exchange 2.0 Advanced Services 2014 Equinix Inc. 17

50 Enabling Enterprise Cloud Adoption Connecting enterprises to cloud services when they need it, where they need it Growing the Cloud Exchange Ecosystem Cloud Exchange Private Access Cloud service providers Network service providers Technology partners Integrators and managed services providers 2014 Equinix Inc. 18

51 Orchestrated Portfolio Evolution Cloud Exchange 2.0 (Q4 14) o Converged Layer 2 and Layer 3 access o Public APIs Performance Hub 2.0 (Q2 15) o Use cases for hybrid cloud enablement o Cloud-enabled services: Security, DDoS protection, Big Data, Analytics, etc. Customer Value Cloud Exchange 1.0 (Q2 14)! Direct virtual access for Windows Azure & AWS! Broad cloud virtual exchange Performance Hub 1.0 (Q1 14)! Consulting services! Hardware procurement & configuration! Carrier selection & management We Are Here Bridge to Cloud Computing Ubiquitous Cloud Access Flexible Data Architecture Buy/Sell Global Commerce Platform Application Performance Acceleration Interconnection Colocation PRODUCTS SOLUTIONS WE ENABLE Equinix Value 2014 Equinix Inc. 19

52 Closing Thought Equinix is uniquely positioned to address the challenges of the transition to cloud for enterprise customers. We are investing in technology innovation, solutions and market development to enable cloud adoption Performance Hub provides proximity and WAN extension Cloud Exchange provides intelligent interconnects to clouds and networks Investments in technology deliver network automation and agility Partnerships are driving the development of the cloud ecosystem 2014 Equinix Inc. 20

53 Thank you 2014 Equinix Inc. 21