Digital Realty Trust ((DLR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Digital Realty Trust’s recent earnings call painted a picture of robust performance and strategic growth, despite some challenges. The company reported strong new bookings, core FFO growth, and successful fundraising efforts, while also making strides in sustainability. However, issues such as currency and refinancing headwinds, high development CapEx, and geopolitical uncertainties were acknowledged as potential hurdles.
Record New Bookings and Interconnection Growth
Digital Realty achieved a remarkable $177 million in new bookings for the quarter, with $135 million attributed to its share. The company set a new record in the 0-1 megawatt plus interconnection product set, securing $90 million in bookings, an 18% increase from the previous record set just two quarters ago.
Increase in Core FFO and Guidance
The company reported a significant increase in core FFO, reaching a record $1.87 per share. This represents a 13% rise from the previous year and a 6% increase from the last quarter. As a result, Digital Realty has raised its revenue, adjusted EBITDA, and core FFO per share guidance for the full year 2025.
Strong Liquidity Position
Digital Realty emphasized its strong financial standing with over $7 billion in liquidity and leverage below target levels. This robust balance sheet positions the company well for future growth opportunities.
Success in U.S. Hyperscale Data Center Fund
The company exceeded expectations with over $3 billion in LP equity commitments for its U.S. Hyperscale Data Center Fund. This success underscores strong investor confidence and interest in Digital Realty’s strategic initiatives.
Expanded Sustainability Initiatives
Digital Realty has made significant progress in its sustainability efforts, with 185 data centers now operating on 100% renewable energy. The company reported a 9% increase in renewable energy usage and a 14% reduction in water usage intensity in 2024.
Currency and Debt Refinancing Headwinds
The company faced a 325-basis point refinancing headwind due to maturing eurobonds, impacting financial results. Additionally, foreign exchange fluctuations were noted as a factor affecting performance.
High Development CapEx
Digital Realty’s development CapEx exceeded $900 million on a gross basis during the quarter, indicating ongoing high capital expenditures. This level of spending could impact the company’s financial flexibility moving forward.
Geopolitical and Macroeconomic Uncertainties
The earnings call highlighted a bad debt reserve linked to broader macroeconomic and geopolitical factors, which have affected financial performance.
Forward-Looking Guidance
Digital Realty provided an optimistic outlook for the remainder of 2025 and beyond. The company increased its core FFO per share guidance to a range of $7.15 to $7.25, reflecting a 7% year-over-year growth. With a backlog of $826 million, Digital Realty has strong visibility through 2025 and into 2026. The firm’s robust liquidity and successful capital commitments further bolster its long-term growth prospects.
In conclusion, Digital Realty Trust’s earnings call reflected a positive sentiment with strong performance metrics and strategic growth initiatives. Despite facing some challenges, the company’s robust financial position and forward-looking guidance underscore its potential for sustained success in the data center industry.