Equinix, Inc. (EQIX) Earnings Call Transcript & Summary

All right. Well, everyone, welcome to our next session here. It's a great pleasure to welcome to the first time we've ever combined Communacopia and our technology conference together to welcome Karl Strohmeyer, the Chief Customer and Revenue Officer of Equinix. Thanks for being here.

Thank you. Good to be here.

You guys do your...

Oh, yes. Let me do my statement here, then I can move on here. Some of what I will talk about today contains forward-looking statements. Please read our SEC filings for more information about factors that could affect -- can you hear me? How about now? Okay.

Let's check with the tech guys. Are we good on the...

Can you guys hear me?

Slight technical issue addressed.

How about now?

Oh, yes.

Okay.

Right. Well, Karl, just to get started, maybe just talk a little bit about your role at Equinix.

Yes, the Chief Customer and Revenue Officer isn't terribly explicit. So I have the pleasure of running all the go-to-market functions for the business. And I've been with Equinix now. It will be 9 years on December 2. Best 9 years of my professional career. And so that -- the scope includes how we market, how we sell, how we service, deliver and the commercial responsibility that we have for our customers across the platform.

And that's global?

That's global.

Okay. All right. We'll start off a little bit high level. I think most people here know this, but you are the largest colocation data center operator in the world. I think you have nearly 250 data centers. You're in over 30 countries. And despite macro headwinds that we are seeing on a global basis, you've continued to have a pretty good year. And so for someone who faces customers and who sees why things are going well, why do you think the business has endured so well through the first half of the year? And how do you feel about that momentum persisting as we go through the remainder of the year and start thinking about 2023?

Yes. No, first of all, thank you for the question. It's an exciting time to be in the digital transformation space because I think whether you're coming off of COVID and you realize that the pandemic has put a ton of pressures on your infrastructure and you were either ready for it or you weren't ready for it, I think it's a bit of an unlock. The other thing, I think, is if you realize what we do and to whom we do it, we're incredibly focused on a set of targeted customers that we believe value our globally deployed infrastructure and need to locate their IT architectures as close to their customers and users as possible. And that's the role we play. And so we've been -- and the reason I go through that is that we've been incredibly focused on those sets of users that value that and need that in their IT architectures and digital transformation. We're seeing it across -- many questions today were around what verticals, what particular subsegments are you seeing that are stronger than others. We're seeing it across the board. Digital transformation, which sometimes is an eye roll because of what the heck does that mean, it is an opportunity for customers to find new sources of revenue as well as take cost out of their infrastructure and operate more effectively and efficiently, and we're in a position to help them do both. And so inflationary times, people are thinking about how do they run more efficiently as well as trying to find and unlock new sources of revenue. So we're seeing it across the board. We're seeing really healthy demand, whether it's manufacturing or health care or financial vertical or in the service provider sector of our customers that are also trying to service the enterprise. So we're seeing it across the board. And we're seeing it in each region. I would say the Americas region has been operating pretty well, and we're seeing that continue to perform. And we're seeing EMEA, the similar dynamics as well as Asia. So it's across each -- all the regions as well, not just the verticals.

Yes, and I think we'll probably dig into those regions in a minute. But it is interesting, I think that the takeaway from what you just said is that the digital transformation that your enterprise customers are going through is essentially independent of the economic cycle that we're in. But is there any way where you are seeing that the narrative, the discussion you were having with them, is reflective of what the macro is?

I think there's more dialogue -- the answer is not a lot. I think there is more dialogue around what's going to happen with particular -- utility pricing in one particular market or the other based on maybe the war in Ukraine. That's certainly a dialogue that I know we can certainly talk about from a utilities and power dislocation standpoint. But broadly speaking, there are large opportunities for unlock that exist in each company out there, and they're looking for help to find that unlock. And again, whether that's optimizing their infrastructure to support more effective cost management or that's to find new sources of revenue, both of which are an opportunity that we can help with. I would also say one of the things that we did several years ago is we invested heavily in our channel. And so when we go to market, yes, we have 600-plus quota-bearing headcount surrounded by a couple of thousand resources on technical overlay and sales engineers and the like, but we also have several hundred key partners that they themselves are positioning their value with us to their end customer. And so it's not just our voices that our customers are hearing. They're hearing the likes of Microsoft. They're hearing the likes of Dell. They're hearing the likes of Cisco. And so that surround is certainly helpful part of us getting the audience to the people that are investing behind those infrastructures.

And who are those channel partners helping you reach that you may not have reached as quickly or as effectively if you try to do it direct? I mean just like what's the bang for the buck? I mean I have to imagine the size of your direct sales force would have to be absolutely enormous to touch every enterprise.

Well, that's exactly right, which is, look, we talk about -- if you're a salesperson out there, not that any of you might be, but being a trusted adviser of your customer is the Holy Grail of that solution selling position, where your customers come to you for help. Whether that help is cost-driven or revenue-driven, they come to you for help. And so we can -- we work hard to be the trusted adviser for all of our customers. But we have partners who have thousands of go-to-market relationships who they themselves are indeed the trusted adviser. If they're bringing us in as a valued partner, that accelerates the sales cycle significantly. So the channel has been this weapon to position what otherwise would take months to a year of building credibility and value and reduced it to a meeting, and then we take it from there and build out and help the customers architect their outcomes. And so that has been a big catalyst.

Are you finding that the channel is also getting better at incorporating you into their process? I would just guess that early on, maybe the way they pitched you wasn't exactly what you thought you could deliver, and I'm wondering about the efficiency that's happening here, particularly as enterprises more broadly are just naturally looking to engage as...

No, super astute question, which is how do we enable the channel to bring us into the opportunities that are relevant for us. And we've been working hard at that, and we always have more work to do. One of the things that a particular interest for us now is, can we jointly develop offers together that they themselves then position to their customers without us? And that is something that we think is a massive unlock to the channel going into the next handful of years. But yes, it's an effort to shape and educate and enable the partners and our team to position each other's value effectively.

And how do you think about how penetrated you are in some of your key verticals? Because historically, you had some legacy verticals, whether it was financial institutions, very big tech companies, obviously, the network operators. That's where you scaled. And for a very long time, it's always been enterprise is really the biggest because that's essentially everybody else. How do you think about where you're penetrated in some of the most important verticals you're attacking these days?

Early days to be very honest with you. I think our enterprise pursuit has been the last 7 years of investment, and that was probably more heavily done first in the Americas, and I think we're seeing the fruits of that, as we'll get to the regional discussion later. We're seeing the fruits of that investment certainly now. But the whole pursuit of the enterprise is one that requires the right sets of skills, the right focus on which customers, the right overlay support resources to deliver that value, the right sets of products, hopefully, that can be consumed effectively. And so all of that surround is something we're still working on, and we like the momentum we're seeing, but we think that there's a lot more opportunity to get even better.

Right. So you mentioned Americas, and so let's jump into the regions here. You generate just under half of your revenue from the Americas business. It's obviously a big and important region, and it's growing nicely. I think you grew 9% in the second quarter. Let's dig into a little bit. What are some of the things that are clicking in the Americas right now?

Yes. I mean, look, I think broadly speaking, as much as when you read the press locally, you would think our economy is not in a great place, but it's relatively really good compared to some other markets around the world. And I think the strength of the dollar is certainly a benefit to U.S.-headquartered companies as well. And I think that generally, digital transformation ends up starting here and then gravitating across the world in various levels of adoption, and you saw that with cloud. And you're still seeing that with cloud as it continues to expand across the globe, and so it's going to happen here first, and so that's good news on a demand underlying trajectory of opportunity. I personally think we're meeting that demand at a level of execution that is an all-time high for us, and you hear us say that on the quarterly calls. We're particularly proud of that investment in the go-to-market resources and the approach and the talent and the channel sets of partners that we're deploying. And so I think you've got a demand profile that's strong and an execution that is at an all-time high, and the convergence of those is translating into nice growth and pretty low churn relative to what we used to see in the past.

So then how do you see that spanning out into your other regions? And how much of it is we're ready to execute as the demand emerges or we actually still have some investment we have to make, whether it's our channel sales in EMEA or new products in Asia?

Yes. No, I'd say it's interesting question. So I'd say there's always deployment opportunities, and we'll talk about our digital services portfolio as an unlock, I'm sure, in a minute. But as it pertains to execution, I think we've invested in EMEA. We've invested in the leadership. We're investing in some of the talent elements. And we were probably a little behind on the channel maturity than we are in the U.S., and so we're catching up on the right partnerships with the right enablement in EMEA even though many of the partners are the same. As you would imagine, some of the largest global technology leaders out there are key partners of ours. So I think EMEA is a quick behind, a quick follow of the Americas. APAC is a little bit -- it's multiple markets. It's not one region unlike the U.S. or the Americas versus North America and South America versus EMEA, and so each market has a bit of a distinct trajectory of its evolution and development around technology adoption and opportunity, but we're seeing that accelerate as well. I think we have some investments in markets to do like in Southeast Asia, et cetera, to help us with our footprint to give us the real right coverage in the region to take full advantage of the opportunity. Happy to talk about that. But I think it kind of goes in that lag with Europe, a little bit of a lag to the U.S. and Asia, a little bit of a lag to Europe.

That makes it sound like EMEA is not growing great. It's actually accelerating right now. You're basically telling me that there are things that you haven't even gotten to yet. So what's behind the acceleration that we're seeing in EMEA today?

Well, I think what you saw in EMEA is a deacceleration and then a reacceleration, and the reason that happened was we had made a large acquisition, Telecity, as you know. And at the back of that, we ended up having a mix of customers that were probably larger footprint in nature and a little less interconnection-biased, and so we've been shifting the EMEA machine to be much more retail-focused and interconnection-focused. That shift has taken a bit of time, and now you're starting to see that retail uptick associated with execution and discipline in EMEA, which coincides with the uplift we're starting to see in the region.

And you still -- despite that acceleration, you still have a much lower average pricing per cab in EMEA than you see in your other regions. And I think that you said in the past that maybe structurally, you're not going to quite get to what you see in the U.S. or what you see in Asia. But how do you think about the potential there to maybe continue growing that? Or is this really becoming a cabinet additions narrative for your EMEA business?

Well, I think 2 things will help us to answer the question. I think EMEA, we will continue to drive increased yield across EMEA over time. And I think both the interconnection focus as well as the price we're charging per interconnection, we're also increasing in EMEA higher than we are in the other markets up to, I think, over 20% in EMEA, and so that will help. I think the area that we will talk about is our digital services deployment. And as we deploy our capabilities in EMEA with our digital services portfolio, that will also help. Right now, we're -- we have more markets we need to deploy in.

Is that digital services portfolio still predominantly in North America that you're offering that?

It is. I mean I would say the one that belies that is our fabric. Fabric is, I think, 56 markets, 180 data centers around the world. That's our -- think of that as our software-defined interconnection capability set. Equinix Metal, which is on the back of an acquisition we did called Packet, I guess, a couple of years ago now. That is in 19 markets, of which most of those are -- we've got a lot to go in EMEA and AP. And then Network Edge, which is in 26 markets. Our goal is to get Network Edge, Fabric and Metal in 30 of the same markets by the end of the year. And that will help us with what we're calling virtualized colo, our digital kind of capability set to allow us to provide an as-a-service offering for colocation across that platform.

That's a great transition because I wanted to spend a little bit of time talking about this. When I go back and think about when I originally started covering Equinix years ago, you were not yet a REIT, and the narrative was this is actually a real estate business. And then you guys said, "We are a real estate business." And it turns out the IRS generally agrees and you now file as a REIT.

Generally agrees. Yes. Thank you.

And so -- and it's been great for the stock, and so it's been interesting to see that you have been embracing a little bit more technology in the product suite. And so it's a long-winded way of saying what was the ultimate reason...

What are you doing?

What was the reason for doing it? How much of it was you identifying an ability to layer something versus actually having customers telling you, "I think you should offer us this?"

Yes. Well, it's absolutely a combination. I'd like to think we are really good listeners of our customers. I mean they are the reason we're in the markets that we are. They are the reasons we do the M&A that we do from a geography standpoint. And similarly, they are the reasons why we're investing in the technology that we do. Like at the end of the day, cloud has taught a set of users that as-a-service flexibility is something that is elastic, meaning it is -- it creates a lot of value on the digital transformation journey. However, there is this need for private multi-cloud, which is there are a set of workloads that maybe are chattier in nature that if we embed in the cloud are really expensive. So how can we deploy them on a platform like Equinix that has all of the clouds, all of the SaaS providers, all of the telecom providers from a localized interconnect in the markets that we need to be in, how do we provide that capability in minutes, not months? How can I have one of my developers go and spin up an instance in Poland or in Warsaw, test the feasibility? Do I see the performance benefits? Do I see the cost savings? Does it make sense for me to have a node in that market? And can I do that as a developer to test my own applications to see how they operate? We haven't had that abstraction or that ability for people to work on the platform. And our customers are like, we need that. And so we've been building that capability. It started with interconnection with Fabric. And so prior interconnection was fiber cross-connects, which we love fiber cross-connects. But if you can go to a portal and turn up multiple destinations across the same port, that is -- the usability of that and the utility of that is significantly higher than a cross-connect at a time. And so we're seeing that similar dynamic with metal, which is if you have compute deployed, can I load my own OS? Can I load my workloads and test them in a particular market? And so we're super excited about the journey. It simply abstracts the need for customers to have the ability to negotiate real estate contracts, order and ship gear, have people that can manage and deploy that, people that can manage and support it versus putting the burden on someone like us as an operator, have it pre-deployed, come to us via software, consume it and then leverage the benefits. Our underlying value as Equinix hasn't changed, right? We're still a data center operator that offers interconnection across the globe for high-performance workloads. We've just abstracted the way to consume that and taken some of the burden of risk, capital risk.

There's been a lot of investment in order to acquire and to build up these products. And as you mentioned, they are not fully distributed across your footprint yet. How do we think about the intensity and duration of investment that you need to continue to make -- to be at a point where you're going to scale those products? And then what else could come next? Do you feel like this is a pretty complete product suite? Or are there obvious things you should be making investments in from here?

Yes. I would say, broadly speaking, it is -- the components are all there. We are in the process of integrating those components so that they are consumable as elegantly as we think they should be. So said differently, I think the metal, Network Edge -- and Network Edge for your benefit is simply think of switches, routers, load balancers as software loaded on gear that we've predeployed so that you don't have to ship a router, you don't have to ship a firewall, et cetera, to a destination. And then Fabric, again, is the interconnection. And we believe those are the primary components of this triple-play virtualized colo, and our job is to integrate them in a way that is consumable consistently across the platform. And so broadly speaking, we think we have the components, and it's just the work to do that deployment and get them in the markets that our customers are asking us for. And we've been learning our way to say, "Where is that demand profile?"

Is your channel able to sell these solutions?

Great question. And so I think that when I talk about jointly developing solutions with key channel partners that they themselves offer through their channel as a force multiplier for coverage, the digital services suite is the unlock for that. When you approach a customer for space, power interconnect today, it's a custom bespoke solution. So you're sitting with your customer and saying, "What markets do you want to be in? What size cage do you need? What level of density? What equipment are you going to deploy?" So it's very customized. Channel-enabling custom is hard. Channel enabling a digital service portfolio that is consumable over -- through a portal is a lot easier. And so we believe it will be a big unlock not just for -- to accelerate the channel, but for our channel partners to leverage as a platform to offer their services on top of.

And as you begin to scale these digital services, we see adoption. How does it affect the performance of the business? Is it we're going to see an acceleration in cabs because you just have a more differentiated solution than everyone else? Or is it literally the distinct revenue line items associated with these services? You're just selling more of a lower churn. I'm sure it's kind of all of it. But you're going to be -- as you're watching the business to see, this made sense, this is working. What are you looking for?

Yes. So what we're looking for is -- I, in fact, even have a go-to-market digital services person that reports to me who's responsible for all of the digital services, both how we market them, how we sell them, how we support them and how we bill for them. And so I'm looking at all of your indicators of pipeline and growth rate and attach rate, et cetera, but it's at a digital services product portfolio level. And so right now, the revenue of all of those services annualized in '22 is around $500 million of our $7.5 billion of business and growing nicely.

I would imagine it's a stickier customer. I mean you're just giving them so much more they have to try to replicate if they weren't getting this from you.

I like the stickiness of colo, and so that's proven to be pretty sticky if we sell to the right sets of customers that value the premium product that we offer. And you can see that in our churn, or lack thereof, around 2% to 2.1%. But I would say, yes, I think the customer is sticky. The instant may not be, right? They may spend something up and test it in a particular market and go, "Oh, I didn't really see the benefit. I'm going to move it to this other market." So we're going to see a different level of kind of behavior on the platform, and we'll have to navigate that as an enterprise. But broadly speaking, I think it is a big unlock.

So in that example, does this mean that you don't necessarily sell all these services at the initial sale to the customer? It's more like we're coming in behind the sale and saying, "Look at how much else you can do."

And I'd say there's 3 motions. What you articulated is the full service: we go there, we whiteboard, we talk about the digital promise of leveraging platform Equinix and all of our capabilities, okay, and we sell them the whole kit. We do that a lot. We love that, and that's a win for the sales team. We also will sell to existing customers, either new markets or new capabilities. And both of those combined, as you know, like 90% of our bookings in any 1 quarter come from existing customers. That's my favorite and least favorite stat. Favorite in the fact that our relevancy is significant and the loyalty is real and the value they derive on our platform is real and durable. I would like new -- more new customers faster. And so the other motion, getting back to the first point, is this product-led growth motion, which is building a set of capabilities that users find us and try the users and do proof of concepts and do trials. Metal allows for that. We need Fabric and Network Edge to also allow for that. And then that becomes a feeder of future customers, full-service customers. And so we've got to learn what the software world knows well, and we're learning as a real estate REIT world is that there's a product-led, software-led growth motion that we're trying to incubate and curate.

Earlier when you were talking about the acquisition in Europe, you made a point that the type of tenant that you had at the point of acquisition wasn't really exactly what Equinix strives for, which is sort of a very, "Give me a lot of space, I don't really necessarily value the uniqueness of it." And you've gone through iterations of this over your history, where you basically said we need to sort of concentrate our portfolio around the customers who, I guess you could say, the right application.

The right location, yes.

Exactly.

Workload.

When you're looking at a broader swath of enterprises that are really embracing the type of architecture that requires them to use your infrastructure, what does the new sale look like right now? Is it a, "I want a small amount of space that I'm willing to spend a lot of money on because it's very unique to this part of my solution?" Or is there some element of enterprises saying, "I'm getting to the tail end of this, I've got a lot of infrastructure I have to move, I'm actually looking to do something very big with you at this point in time?"

Yes. So I'd say the entry points -- and let's see if I get to the -- please ask me again if I don't get to the answer, which is I think the entry points are I've got all of this pressure on my wide area network, and the applications are not performing. And I've got users in multiple places around the world that need help, and their performance is hurting. So that becomes a network optimization approach, and we'll go in there with an unlock called Performance Hub, and we'll help them localize their traffic such that it's not all going over the wide area network. It's local in the markets. It's being created and off-ramped directly to the clouds or to the networks in each one of the markets, and so think of that as a network optimization play. The other play is private cloud, multi-cloud, which is I've got all of these workloads, some of which are chattier than the others. I want to deploy them localized to my users. Help me deploy them in the right markets so that I get the benefit associated with that. Either one of those, I would say, would be -- if we have done that already and customers are expanding and adding new sets of new market opportunities, we're helping them to expand and optimize that infrastructure and that deployment for the benefit of their users and for the benefit of revenue and cost. At the private cloud, multi-cloud level, we're helping them manage at a workload level. So we're saying what workload should be in the cloud, what workload should not be in the cloud, why should they be in what cloud and helping them to architect the workloads and deploy them across geography. In both scenarios, we're in early innings. I mean in both scenarios, there is so much more opportunity to unlock with each one of those customers, and it just depends on the entry point. If we're coming in with network optimization, we'll start with the performance of the WAN and then we'll work to workloads. If we're coming into workloads, then we'll help them with the workloads and then we'll optimize the WAN. And so it really depends on the entry point. But all of them, because of who we go after, value the global deployment of our infrastructure. And so as we add new markets, as we add new capabilities, we can upsell them those capabilities over time.

Okay. Karl is open to taking questions. So if you have a question, raise your hand, and we'll have someone bring a microphone over. And we actually do have, I think, a question over here. Just wait for the -- do we have a microphone back there? So they can hear on the webcast.

I guess I have a question on the pricing increase in Europe potentially. If I just look at your ESG disclosure on the utility and then just roughly look at how much Europe has exposed, how much is not covered by long-term PPAs and then you look at the absolute dollar difference of these different markets, it's come out to be, just my estimate, like 15% to 30% of potential price increase if you just purely pass that to the customer. And I guess you guys talked about you're going to assess how much is acceptable to customer. Could you -- I guess my question is, one, could you kind of describe what is that process? Is it a negotiation? What do you think is the customer's tolerance is at? How do you think about that? And the second is, when you think about that magnitude of price increase, do you think that moves the needle between comparing the costs going to colo versus cloud for running [ minds ], et cetera?

Interesting. Yes. So the net underlying dynamic is, as you know, we hedge in unregulated markets, obviously, our power position. And with those hedges like for '22, we're 95% hedged, and so customers in Europe are not feeling the increase associated with power costs from us yet because our hedges. And as those hedges come off, we're looking at what rate do we hedge and lock in our rates so that we can then understand the predictability of the cost for customers in power in EMEA in next year, in '23. As we all know, the power market in EMEA is completely dislocated primarily because of the war and probably another -- some other factors. We are going to pass on our increased power to customers across EMEA next year. The underlying -- that notion that you're asking how much, we're going to do 100% of the power increase to our customers, and I know it's not going to be a surprise. I don't think I'll be getting a bunch of Christmas cards from customers, and I don't wish we were in that position to have to do that. But the size of the implication to what's happening in the market is just such that we have no choice to do that. What that net effect does as far as there are other choices, I don't know. It's a really good -- that's a question for us to think about. I think the one thing that we've done uniquely well, which has probably bored the heck out of all of you, which is we've been incredibly disciplined on who we go after. And you heard it in some of the answers that I had today, which is we go after customers that underlyingly value what it is we deliver, such that 90% of our sales come from those customers. And so our belief is, is that the value they're deriving from that deployment in EMEA even with that cost increase is still going to be worth it for them in the long run. And when the markets become, let's say, healthier, we will pass on the benefit to them as well once that happens. So I don't know. Hopefully, that answered some of your questions.

[indiscernible]

Into EMEA? Yes. I mean so quite a few. So as you know, our -- if I understand the question, you know our stat, which is 60 -- 89% of our revenue comes from customers deployed across multiple markets and 68-or-so percent of our $7.5 billion comes from customers deployed across all 3 regions. And so that globalized platform notion is real, and so a lot of U.S.-headquartered companies will be impacted by that price increase in EMEA as well as Asian-headquartered companies and EMEA-headquartered companies.

So I don't believe I'd ever heard you guys say in the past that you wanted to be in digital infrastructure services. I think you learned that, that was an opportunity. But I had heard in the past, you didn't want to be in the wholesale business.

Yes.

And lo and behold, you now have a hyperscale...

Yes, we do.

JV. One of the reasons...

Two of them.

One of the reasons -- it's 2.

Yes.

One of the reasons you got comfortable with it is you were able to come up with an economic model that delivered yields that you convinced Keith were attractive enough, and so it seems that the financial element of your presence in the hyperscale market is meeting your criteria. So the question I have is, can you talk about maybe some of the other operational benefits that you're seeing in your core colocation business as a result of having the ability to offer xScale?

I'd say there's 3, probably 3 benefits. The first being the relationship benefit that we have with the hyperscalers. The second being the supply chain benefit, believe it or not, of us having the large scale of both retail and wholesale deployments to go get generators, for example. We're probably on the top of most people's list from a supply chain. And then the third would be the campus benefit of attraction through the ecosystem. Those are kind of the 3 benefits. The first on the relationship side, which I think is probably the most important out of all 3, is that when we're sitting down with the likes of Google or Oracle or Microsoft, we're not just having a, "How can I help you with your compute deployments across the globe?" We're also having a conversation, "How can I help you gain access to those compute deployments through network nodes and the capillary nature of interconnection to your product?" And we're also having on the third, which I think is the most valuable but a bit selfish in that pursuit, is we're helping them think through the go-to-market pursuit of getting customers on their platform. And what is probably not understood is we partner with the likes of Microsoft and AWS and Oracle and Google, et cetera, on a go-to-market, on a territory, on an accounting basis. And jointly, we go and attack customers together because they know that if their customers connect to their offering via our fabric or our platform, they will sell a lot more instances of their subscription or more of the subscription across an instant. And so that synergy on the go-to-market level is really valuable. And having that full breadth of conversations with a Microsoft is pretty sticky and allows us to think about where we deploy in markets, how do we need to invest, how do we influence where they're going to go and vice versa. And so that's a huge part of the benefit that we don't really talk much about. And then the other is supply chain and then the campus level of interconnection, which is having their deployments on our campuses, which is an attractive to the enterprises who also want to deploy approximate to where the clouds are.

And now that you're doing this and you're seeing the actual benefits, how does that change your view on how broad across your portfolio xScale deployments could be?

There doesn't seem to be any shortage of demand, and so I think we're just being thoughtful that they then up to the markets in which either we are or want to be is probably the answer.

On the M&A side, you guys continue to grow the business through acquisitions. From your standpoint and you think about what you're hearing from customers and what can be additive and you're going to Keith and you're saying these are the things I think we should be buying, how do you think about what's additive to that sales motion with your customers? Is it more geography? Is it more capabilities? Is it some mix of the 2?

Yes. No, I think it's a mix of the 2. I mean if I could find a GPX like we found in India or if I can find another main one like we found in Nigeria and in Africa, we would. I think they bring a level of interconnection. They bring a credible leadership and management team. They bring an understanding of how to do business in the markets that we don't, and then we build on them in order to build franchise scale around them. And so I think it's the age-old answer that we've given, which is, yes, we're looking at incremental markets to deploy, but we want it to be built around interconnection. And so we'll continue to look at that in various markets that we're not. Southeast Asia is probably a great example for that discussion. But yes, no, it's a capability set, management team, understanding of the underlying market. And are they -- is it a kernel, which we can build a franchise around? And so far, it has been. And we're excited about Entel and the Chile acquisition with -- and also with Peru. We believe that, that is also an opportunity for us to build on the West Coast of South America.

Right. Well, Karl, we're out of time. Thanks so much for being here.

Unfortunately. Yes. Thank you, everybody. My pleasure.