Equinix, Inc.
Q1 2020 Earnings Call Transcript

Published: 7 May 2020

[Operator:]

Good afternoon and welcome to the Equinix First Quarter Earnings Conference Call. All lines will be able to listen-only until we open for questions. Also, today's conference is being recorded. If anyone has any objections, please disconnect at this time.I'd now like to turn the call over to Katrina Rymill, Vice President of Investor Relations. Thank you.

[Katrina Rymill:]

Good afternoon, and welcome to today's conference call. Before we get started, I'd like to remind everyone that some of the statements we'll be making today are forward-looking in nature and involve risks and uncertainties.Actual results may vary significantly from those statements and may be affected by the risks we identified in today's press release and those identified in our filings with the SEC, including our most recent Form 10-K filed on February 21, 2020. Equinix assumes no obligation and does not intend to update or comment on forward-looking statements made on this call.In addition, in light of Regulation Fair Disclosure, it's Equinix' policy not to comment on its financial guidance during the quarter, unless it is done through an explicit public disclosure.In addition, we will provide non-GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why the company uses these measures in today's press release on the Equinix IR page at www.equinix.com.We have made available on the IR page of our website a presentation designed to accompany this discussion along with certain supplemental financial information and other data.We'd also like to remind you that we post important information about Equinix in the IR page from time to time and encourage you to check our website regularly for the most current available information.With us today are Charles Meyers, Equinix' CEO and President; and Keith Taylor, Chief Financial Officer. Following our prepared remarks, we'll be taking questions from sell-side analysts. In the interest of wrapping this call within an hour, we'd like to ask these analysts to limit any follow on questions to just one.At this time, I'll turn the call over to Charles.

[Charles Meyers:]

Thanks Kat. Good afternoon and welcome to our first quarter earnings call. Before we get into the results of the quarter, I want to take a moment to acknowledge the unprecedented times in our world and share our approach to this continuously evolving situation.First and foremost, our hearts go out to all those who have been impacted by COVID-19, and we extend our gratitude to all the frontline workers who are helping to keep us safe and healthy as we navigate this together.From the beginning, we've approached this situation with a consistent set of priorities

[Keith Taylor:]

Thank you, Charles and good afternoon to everyone from Burlingame, California. Equinix yet again delivered another very solid quarter of performance. Our success stems from the strength of our teams, who come to work day in and day out to meet the needs of our customers and so many others, including you, our shareholders.We started 2020 well positioned to create significant value for the year and beyond. And right out of the gate, the team delivered as our go-to-market engine yet again produced a solid set of diversified bookings in the quarter. It was our second best Q1 bookings quarter in our history.So, as we sit here today, we firmly believe our platform is not just relevant, but even more essential as the world we know quickly shifts to digital, only accelerated by the opportunities and the challenges created by COVID-19. Our xScale and Packet acquisitions, which both closed in Q1, are tracking well against our early expectations.Also after the quarter end, we entered into our second hyperscale JV for the Japan market, which we expect to close in Q3 and are already looking at our third and other joint ventures for the rest of Asia and elsewhere. And we continue to look for other platform enhancing acquisitions, both targeted and opportunistic.Our inter-region activity remain strong, a reflection that we're selling well across our global platform. We continue to enjoy net positive pricing actions resulting in very firm MRR per cabinet on a currency-neutral basis.And lastly, after funding the two acquisitions this quarter, we have about $1.2 billion of unrestricted cash on our balance sheet and pro forma for our new 364-day facility. We have an incremental $2.5 billion of liquidity to support our global growth and expansion initiatives. We have an active construction pipeline with 32 major projects currently underway across 22 metros in 14 countries.We made a few minor adjustments to our ready for service dates in certain markets, while we continue to work closely with our suppliers and partners to deliver the capacity as close to the target dates as possible with limited impact on our guidance for the year.And we expect another year of active builds and are maintaining our full year capital expansion guidance. As we have said before, we believe the diversity of our business across verticals, sectors, markets and customers, puts us in a highly favorable position to both capitalize on industry trends, but also weather the macro shifts and increased volatility.Specifically, our current revenue exposure to the travel, energy and retail industries is less than 3%. Also, I want to reiterate the importance we place on our employees, our customers and our communities. Let me provide you two examples

[Charles Meyers:]

Thanks, Keith. Despite the challenges from COVID, the Equinix business is performing well, and we remain focused on the clear set of priorities we laid out at the beginning of the year; investing in our people; evolving our platform and service portfolio to meet the changing needs of customers; expanding our go-to-market engine to fuel long-term growth; and simplifying our business to drive operating leverage; and enhance our customers' experience.As we continue to navigate an uncertain environment, we will remain diligent, flexible, disciplined, and prepared across the company from how we set up our IBX technician shifts to enhance safety to increasing balance sheet liquidity, investing in new service development and hiring top talent to expand our selling engine, all while closely tracking our financial and operating metrics to ensure profitable growth and maintain a keen focus on AFFO per share as a lighthouse metric for the business.As we have in prior market dislocations, we will manage the business prudently with a long-term orientation and a clear objective to extend our market leadership. As our customers continue to make clear, the breadth of our product portfolio, the reach and scale of our platform, the depth of our balance sheet and critically, the passion and resilience of our people will not only enable Equinix to weather the storm, but will position us to execute aggressively on the other side of this unprecedented crisis and capture the massive opportunity that lies ahead.So, let me stop there and open it up for questions.

[Operator:]

[Operator Instructions] Our first question will come from Phil Cusick with JPMorgan. Your line is open. Phil, please check your mute button, your line is open.

[Unidentified Analyst:]

Hi, this is Richard for Phil. I just want to get a better sense of the bookings through the quarter. Was it pretty steady? Or did it start to fall off at the end? And what have you seen more recently? And then a quick follow-up on Packet.

[Charles Meyers:]

Hey Richard. Yes, I think we saw -- definitely saw -- it was quite a normal quarter, I think, for the first couple of months. And then as we as sort of COVID situation became a bit more acute, I think there was uncertainty that created some level of friction.Although, again, we had a really strong quarter across the board generally. But there was, I think, some buying friction in the system, but I would say we entered Q2 with a really healthy pipeline and actually saw strong early conversion of that pipeline in the quarter.And I think right now, we're seeing the early signs of a bit more return to normal and I think what we're also seeing is our selling team really becoming more accustomed to driving sales cycles in this setting. And so overall, we continue to feel good about the bookings productivity of the sales engine.

[Unidentified Analyst:]

And then with Packet really quickly, it has a pretty wide range. But I guess, looking beyond this year, should we expect more steady growth? Or can we see a bit more of a hockey stick as it kind of scales out?

[Charles Meyers:]

That's a great question. I do think that we can accelerate growth in that business. It's obviously a relatively small business now. I think there's a meaningful opportunity associated with this kind of bare metal private infrastructure immediately proximate to the public cloud.And by the way, I think it really fits well with kind of what people are seeing and how they're responding to COVID in terms of their desire to be able to deploy infrastructure in a more frictionless way. And so we think as we add enterprise feature set, as we extend our partnerships with the software players and platforms like VMware, Red Hat, et cetera, that people have really invested significantly and that it's going to be a real tool for us as people deploy hybrid and multi-cloud architectures.So, I think that we'll have to reset when we give you a more longer-term guide and talk about that. But I do think there's an opportunity for us to expand growth in that offering.

[Unidentified Analyst:]

Great. Thank you.

[Operator:]

Our next question will come from Jonathan Atkin from RBC Capital Markets. Your line is now open.

[Jon Atkin:]

Thanks very much. So, two questions. One, kind of high level. Any impacts in Europe that you're seeing from the merger involving interaction?And then a second one for either Keith or Charles. We're kind of now beginning in May and where have things settled out now that we're kind of into COVID on pricing. I took away from Keith's comments that pricing is actually pretty healthy, but where are we kind of settling out in terms of the run rate around cabinet adds and cross-connect adds? Thank you.

[Charles Meyers:]

Sure. Remind me the first one, Jon, I'm sorry.

[Jon Atkin:]

Europe and any impacts you're noticing from the merger involving the interaction, any opportunities with that--?

[Charles Meyers:]

Yes, I think we haven't really seen a meaningful change in the competitive environment in Europe, and our demand continues to be strong. I think we're seeing healthy pipeline and healthy bookings as well as strong pricing in the European theater. So, we haven't really seen a meaningful change. We'll continue to monitor that and determine if that's -- if there's any change to that.And then relative to the broader sort of COVID in terms of how it's settling out in cabinet adds and pricing, et cetera. I'll let Keith add here as he wishes. But yes, as we said in the script, I think firm pricing, in particular, in Europe, we're continuing to navigate sort of adjustments in our interconnection pricing very effectively.I mean I think that's given us some nice lift from a price adjusted gross booking standpoint. I think cabinet adds, you saw Europe was a particular oddity caused by basically something that happens every now and then, which is a pull forward from cabinets into Q4 from Q1 and a push out for cabinets out of Q1 into Q2.And so I do think you're going to see -- we saw a very strong Q4, and I think we're going to see a strong Q2. But obviously, we saw a weaker Q1. But I don't think that's a reflection on demand. I just think that's one of the things we've always encouraged you to look at sort of rolling four-quarter averages on cabinet adds.I think cabinet adds are going to be slightly lower, particularly in Europe, maybe as we continue to adjust our mix. Because if you look far enough back, you saw quarters where there were really large cabinet adds in there, associated with hyperscale type deals.We would really prefer, obviously, to direct that business to the xScale JVs and keep our capacity and our capital applied to the very high-return retail business. And so I think that will impact cabinet adds to some degree, but that's fully contemplated kind of how we're guiding in the business, and we think it's going to, again, have favorable impact on other core operating metrics. Keith, anything to add there?

[Keith Taylor:]

Charles, just further to your comments, I'd make the comment that we saw not only strong pricing in Europe, we saw it across the platform, which is important, Jon, as we think about our business. We talked about the fact that there's net positive pricing actions. Again, it's not just Europe, but again, it's across the platform. And it gives us confidence that we're continuing to see, on a currency-neutral basis.Clearly, there was some currency impact to the metrics which we share in our earnings deck. But overall, we're delighted with what we're doing. And part of what Charles also alluded to and we talked about it, Packet and some of our other service offerings, it is our view that it will continue to add value on a per cabinet basis.I think there's going to be a higher attach rate, and I think interconnection is going to continue to be strong. And all of that sort of lends to a more positive pricing environment for Equinix.

[Charles Meyers:]

Yes. And I might add -- I might, Jon, have just one more bit of color that kind of bridges between your question and Richard's prior question. What we're finding from a booking standpoint and overall selling productivity is a bit of kind of puts and takes.There's been -- as I said, there was some friction associated with sort of, I think, the near term towards the end of Q1, we're getting back to where people are adjusting, and we're seeing some relief on that. But interestingly and perhaps counterintuitively, we're seeing greater access to decision-makers.Decision-makers are kind of having -- maybe having a different schedule phenomenon, and we seem to be having greater access to decision-makers and seeing a greater resolve on their part to make commitments to move forward aggressively with their digital transformation needs.Now, I think it may mean some delays in some cases, just out of, again, depending on the sector and depending on how acute their other issues might be. But if anything, we're seeing a greater level of resolve in terms of how they're thinking about digital transformation. So, it's a bit of puts and takes. But again, I think we're off to a strong start in Q2 and feeling good about the pipeline.

[Jon Atkin:]

If I can squeeze one in for Keith just on the variability in maintenance CapEx. It was quite significant, and you talked a little bit about that. But what's kind of mix of that bucket?And what's the -- I guess, what were the surprises around that, that what were the normalized levels that you're kind of leading us towards? If you maybe review what makes that up and what's the source of variability of going forward? Thanks.

[Keith Taylor:]

Sure. Yes. We did see slightly less this quarter than we anticipated, roughly 1.2%. If I go to the same quarter last year, it was 1.5% of revenues. Meaning, certainly, as we're all aware during the latter part of the quarter, things started to slow down a little bit. We also were putting our IBXs into a more restricted fashion. No surprise as things took root in different parts of the world.But all that said, when you look at our overall guidance, we're still looking at somewhere around $150 million to $160 million of capital that will go into recurring and only a portion of that, of course, is maintenance, roughly 2% of our recurring CapEx is maintenance.And so you'll see it go back to a more traditional level in Q2. That's reflected in the guidance. And then for the year, you'll see it. Roughly a little bit lower than we saw last year, but roughly in line with what our expectations would be on a go-forward basis.

[Jon Atkin:]

Thank you.

[Operator:]

Our next question will come from Frank Louthan with Raymond James. Your line is now open.

[Frank Louthan:]

Great. Thank you. Two questions. One, any of the recent strength coming from business you think might be being pulled forward as customers are kind of grabbing some space, it could impact the back half.And then what do you think the conversion rate will be on virtual cross-connects as you've been doing well with those and as folks are signing those up and then converting them into more permanent facilities. Thanks.

[Charles Meyers:]

The -- Frank, I'm sorry, I lost the first one again. These double questions are killing me today.

[Frank Louthan:]

Yes, just any recent strengths that you've seen, do you think any of that's coming from business that might be pulled forward from, say, the back half that could maybe cause a headwind then and--

[Charles Meyers:]

Yes, I'm sorry. Yes, I don't think so. I think that I think we're seeing that as a response. I think the question of whether or not the demand that is creating that will be sustained over time. I think that's a reasonable question. And -- but I think for the most part, people are generally, they design their networks with a certain amount of headroom where they design their overall delivery systems with a certain amount of headroom. The work-from-home obviously chewed up a lot of that headroom and people had to scramble to add capacity.I think we were incredibly responsive in helping people do that. But I don't think that -- and I think there's some chance that the headroom increases as we moderate more towards a new normal.But I don't think it's going to -- I don't think it will have a huge impact because I think it was more of a burst that we saw there offset to some degree by other factors. And I think we're just kind of going to normalize, hopefully, more so in the back half, again, barring any kind of second wave or any other strange dynamics.So -- and I don't think from a capacity situation, I think most markets were in very good shape, and not worried about parting ways with that capacity in terms of creating constraints in the back half.And as for interconnection, again, I really feel good about the way the business is trending. We were more towards the low end of what we were guiding in terms of total count, but we had a very strong gross adds quarter, the strongest in several years.And -- but we also had some elevated churn associated with some network grooming, both seen 10 to 100 migrations and some consolidation activity in terms of people who are undergoing acquisitions and consolidating networks associated with that. But the virtual cross connection, we think people -- one of the things we talked about in the script is ARPU going up, and that's a real reflection of people buying ports.And then provisioning cross-connects and driving traffic on them in ways that are increasing the ARPU on a per-connection basis. And so we're actually seeing that right in line, if not better, than our physical cross-connects. And so we're really, really pleased with the overall trajectory on the ECX Fabric.

[Frank Louthan:]

All right, great. Thank you very much.

[Charles Meyers:]

You bet, Frank.

[Operator:]

Our next question will come from Michael Rollins from Citi. Your line is now open.

[Michael Rollins:]

Hi. I have two questions; I'll break it up into two parts. The first one is just thinking about the disclosure that your channel I think, you said was 30% of bookings this quarter. I'm curious, is that what's driving that strength? Is it the enterprise interest in adoption? Are there other things that are driving that up? And what kind of visibility do you get into the pipeline that the channel is looking at versus your own sales force?

[Charles Meyers:]

Sure. Is that -- was that it? Or do you have another one?

[Michael Rollins:]

I was just going to ask for a clarification also. When you described the zero to $50 million revenue impact from COVID-19. Earlier in the conversation, I think you mentioned Smart Hand fee waivers. And was curious if that range is only waivers for Smart Hands services? Or are there some other things that were just anticipated in that guidance impact range? Thanks.

[Charles Meyers:]

Sure. I'll take the first one, and then Keith can comment on the second one, and I'll add as appropriate. So, channel, yes, again, very excited about the momentum we have in channel. And I would say it's largely attributable to the enterprise market, Mike.We -- I think that's where we're really seeing the effectiveness of our channel partners in terms of reaching enterprises with whom they have long-standing relationships, existing contractual vehicles, et cetera.And then also with some of our channel partners, where we're combining our value with theirs to create a full customer solution. And by the way, the hyperscalers fall into that category as well, as they have now seen a very clear sort of signal of the demand for hybrid cloud.If they're seeing a sales cycle being restrained by the need to satisfy the private portion of the hybrid cloud requirement, then they're coming to us, bringing us in and allowing us to help them get that resolved so that they can really satisfy the public cloud demand.And so we see it across a range of channel partners and also across a range of verticals, but really combining our value with that of our partners to solve end customer needs. And in terms of -- but definitely very slanted towards the enterprise.And then in terms of visibility, what I would tell you is that today, we are primarily what I would refer to as a sell with channel. So, we are still in the relatively earlier phases of channel maturity and we're not yet at a point where, generally, people are selling the Equinix value proposition on their own. They're typically engaged with the client, a customer. They engage our sales team. We sell jointly.We comp our direct rep as well as the channel partner, a little bit of cost in there, but really quite modest when you consider it relative to the total customer lifetime value. And so we are getting really good visibility.And of course, they have to register deals to get paid. So, we get really good visibility to the overall funnel on the channel side. So, Keith, I'll let you handle the sort of the discussion on the revenue guide.

[Keith Taylor:]

Sure. The second question, Mike, the zero to $50 million that Charles commented in his prepared remarks vis-à-vis the revenues. It's really a reflection. There's a lot going on with the global pandemic, and there has been some uncertainty that's created. Having said that, we had a really strong Q1.Charles alluded to the fact that we have a very, very healthy pipeline, and we've had a great start to Q2. And so we recognize that. All that said is, when we think about the scenario planning, which we and I assume many others are doing, what are the potential implications on the business. And of course, we've thought about different things. Could there be an extension of the book-to-bill cycle? Could there be a weakening of the pipeline?Again, we haven't seen that yet, but these are examples. And hence, as you look forward in understanding what are the overall implications of the COVID-19 pandemic, we sized it of $0 to $50 million.Now, having said that, the first quarter, we've absorbed $3 million already. That $3 million, $2 million of it relates to Smart Hands that we basically in certain cases, with customers will offer free Smart Hand services because of the restrictions that were placed on our IBXs, and then there was a small sales allowance that we put in place.As we look forward, we're going to continue to offer those on a selected basis to certain customers Smart Hands. And therefore, on a go-forward basis, that will continue for some period until we have better clarity on how, if you will, our business and the rest of the businesses around the world will open back up.And then other things that we've thought about are what are the implications on customers on whether we need to make concessions as it relates to invoices that have already been generated, to write-downs to companies that go out of business, and we've reflected all of that.And hence, when you look at the revenue guidance page that we delivered in our earnings deck, you have a pretty good sense of what the scenarios are that we could plan for here.Yet having said all of that, we're going to run the business to deliver against our AFFO target at the midpoint or better. And so that sort of gives you a sense of what we're anticipating. But right now, the most concrete thing I can tell you is that there's selected -- sorry, select cases where we're delivering Smart Hands for free to our customers to certain customers.

[Charles Meyers:]

Yes. And Mike, I mean, obviously, just it is more than -- that range is impacted by more than just as Smart Hands, as Keith indicated. And it was just argued that given the uncertainty about the depth and duration of exactly what we'll see here, that it was prudent for us to give a -- consider those other items like book-to-bill and some modest level of concessions. And try to size those and say what could that impact be during the course of the year and let's adjust accordingly.But again, we're feeling good about the early start to Q2, feeling good about the discussions we're having with customers, which are quite limited relative to concessions, et cetera. And so we're feeling good about where we're headed.

[Michael Rollins:]

Thank you very much.

[Operator:]

Our next question will come from Simon Flannery from Morgan Stanley. Your line is open.

[Simon Flannery:]

Great. Thank you very much. Good evening. I wonder if you could update us a little bit on the xScale progress. How are things going with the initial JV? Nice to see the latest signing here.And then just continuing on the previous theme, you had churn at 2.4, you reiterated the two to 2.5 range. Do you think you're likely to remain at the upper end over the next couple of quarters? Or whether it was that more the onetime items that you were calling out, so you might go back down to where you've been in the last couple of quarters? Thank you.

[Charles Meyers:]

Sure. So, xScale is going well. I think there's lots of demand. It's a complex business in terms of both the construction side of the business and all that comes with building large-scale projects like that as well as the sort of demand side of the business and dealing with very -- certainly large and important and strategically critical, but also very demanding customers. But the -- I think that they've always demonstrated a strong appetite for us to be satisfying a portion of their large footprint demand.And so we're very engaged with them and seeing a strong pipeline not only for the projects that we already have underway or built out, but for new markets as well. And so very healthy and vigorous dialogue with customers. And as I've always said, it wasn't our -- we aren't planning to be really chase after market share at all costs and hyperscale.Our view is work to generate -- work to win the market demand that we think is critical to cloud ecosystem positioning and we think we're -- we feel like we're being very successful in those conversations.And then obviously, we're very excited about the Japanese JV. We think it's a terrific market. We think we're well-positioned. We think that supply is going to be somewhat scarce and difficult. And we think -- and therefore, we've had a lot of interest in the capacity that we're projecting to bring to market. So I really feel good about that. And again, as Keith indicated, we're underway with additional JV conversations in other parts around the world as well already.Relative to churn, again, we did have some churn that impacted the EMEA cabinet adds and brought us a little bit towards the higher end of the range. But I think two to 2.5 is -- we're just -- we're comfortable in that range. And we, of course, are doing everything we can to manage that towards the bottom end. But I would just reiterate, we're comfortable with that range.

[Simon Flannery:]

Okay. Thanks a lot.

[Operator:]

Our next question will come from Ari Klein from BMO Capital Market. Your line is now open.

[Ari Klein:]

Thanks. Chuck -- Charles, you mentioned some friction in the enterprise. How challenging is it to add new logos in the current environment? And what are you doing there to kind of help with that?And then some of the -- you mentioned network grooming impacting cross-connect net adds. Was any of that related to COVID? Or is it unrelated?

[Charles Meyers:]

Sure. Yes, we did see -- we actually had a good quarter on new logos, and we tried to unpack that in terms of was that in the first two-thirds of the quarter and what do we see in the back half. And it was lighter and I would say our bookings from new customers was slightly less than it has, but not in a meaningful -- a particularly material way.I do think it's harder. We're finding that we're having to learn a new set of skills around being able to get an account over the line fully without the physical interaction. But I think we're already seeing that take root. And we've already actually given our sales teams, a number of new tools to be more effective in that setting.And so I think if there is that -- but obviously, there is some level of friction. And I think we just need to be cognizant of that. And that's why when we talked about the bottom end -- widening the bottom end of the range a little bit; it really reflects some of that. And our hope is that we are -- we return to some form of normal sooner rather than later.But even without that, we feel like the sales team can be fairly productive. But there is some level of friction in new logo capture undoubtedly. And then relative to network grooming, it is no, we did not see it as COVID-related. It was associated with some additional 10 to 100 kind of migrations and then also associated with some network consolidation associated with prior acquisitions. And so we saw a little bit of a and it's not atypical.You usually see a slowdown in Q4 because of the sort of network quiet periods. And then you see some of that activity sort of take place in Q1. So, not particularly surprising to us.And as I said, I do think that we're probably at a point now where a lot of the initial bump of 10 to 100 kind of went through with some of the largest players. But there's going to be a continuation of that as -- because the minute it becomes economic for somebody to upgrade electronics based on their route analysis, they're clearly going to do that.So, there's going to be a little bit of that in there, but we feel really comfortable with that sort of $7,000 to $9,000 per quarter guide and the gross adds are particularly encouraging.

[Ari Klein:]

Great. Thank you.

[Charles Meyers:]

You bet.

[Operator:]

Our next question will come from Colby Synesael with Cowen. Your line is now open.

[Colby Synesael:]

Great. Thank you. Two follow-up topics. One is related to a question, I think, Jonathan Atkin had asked. When you think about your bookings for the full year in the new environment that we're in versus what you may have thought they are going to be entering the year on January 1st.Do you think with all the puts and takes that you expect bookings to be down, the same, or up today versus what you would have thought on January one for the full year of 2020?And then secondly, as it relates to Rollins' question on the $50 million, I know in the disclosures, you mentioned Remote Hands. But given the number that was in the actual first quarter, I think it was $2 million versus the $50 million, it seems like it's obviously a lot more than that.Am I fair that -- am I correct that you're just really trying to be conservative and give yourself kind of a plug, if you will, for what could be happening, but it's not necessarily something that you're seeing right now and, therefore, actually could potentially be a source of upside as we go through the course of the year.And then lastly, just a housekeeping question. You guys are supposed to have your two-year Analyst Day coming up in June in New York City. Just curious what the expectations there are? Thank you.

[Charles Meyers:]

Great. Let me comment on the first one, for sure. I'll give you a little bit on the second one, maybe Keith can add in, and then I'll ask Kat to maybe jump in and talk about the status on Analyst Day. But in terms of bookings, as to if we looked at it and said, what's our is our expectation now that it's going to be the same, better or worse than what we would than what we thought be coming into the beginning of the year.Obviously, I think by virtue of the fact that we've widened the bottom end of the range and, therefore, slightly lowered the midpoint on our revenue guide; I think we're indicating that there will be risk balanced towards the downside in terms of bookings and revenue.But that, that risk is actually fairly modest. And so I think that would be the way I would characterize it. Again, we've very strong Q2 strong Q1 bookings, strong Q2 pipeline, where we see signs of sort of friction and some of the factors that were impacting us sort of at the peak of COVID beginning to moderate. And so our hope would be that we -- we'll see that, that risk will dissipate.But I think that's an accurate characterization is that since we lightened the bottom end, we would see a little bit more downside risk from what we had originally planned. But I also think there's opportunities for us to continue to close those gaps during the course of the year, which kind of brings me to the second question, which is, is that all one? Reiterating it is in all Smart Hands, it's a portion of that.If you -- as Keith said, a couple of million made in the quarter. But obviously, it was a relatively short stub period. Should that occur throughout Q2, Q3, and Q4, we would see, obviously, more than that, which would contribute to a meaningful portion of that $50 million but then there's other things in terms of potential book-to-bill delays, concessions and sales reserves, et cetera, that might also impact that.And so I think it was our best judgment about how to reflect what we thought the risks were by opening up the bottom end slightly and leaving the top end. In that if things mitigate quickly, we get back to a more normal environment that -- and the business continues to perform well even in this environment, that we think we can close those gaps. So, that's kind of what I would say. Keith, I don't know if you have anything to add on that second topic?

[Keith Taylor:]

I think it's well said, Charles. Thanks.

[Katrina Rymill:]

And then, Colby, to your question on Analyst Day on -- so as you can appreciate, given that all is going on, we will be moving our Analyst Day back. We absolutely love hosting our investors out of New York. We typically host a very large event, but given COVID, we will have to push back.In the meantime, Chip and I are going to be increasing the amount of reach outs all virtually, but were aimed to increase amount of conferences, the times and engagements, and looking forward to having a very active May and June with our investor base.

[Colby Synesael:]

Great. Thank you.

[Operator:]

Our next question will come from Jordan Sadler with KeyBanc. Your line is now open.

[Jordan Sadler:]

Thank you. I wanted to follow-up on a couple of other questions or topics that have been discussed. First, regarding concessions and/or collections looking into April, either with regard to the $50 million or otherwise. The have you seen or have any requests from some of your customers? And can you quantify either number of requests or percent of rent reflected by those requests to date?And then separately, just touching back on the book-to-bill. What -- can you quantify maybe any delays that you've seen as a result of COVID or as a result of the lockdowns related to COVID, directly as it relates to book-to-bill?And then coming back to the churn, specifically in EMEA, what was that attributable to specifically, if you could add a little bit more color? And then on the timing in the quarter, that would be helpful. Thank you.

[Charles Meyers:]

Sure. That's a lot, but I wrote it down this time and I make a note so I can remember it. Keith, maybe you can start with the first pieces there on concessions and collections, et cetera.

[Keith Taylor:]

Sure. Jordan, as you can appreciate, still pretty early in the process. As we've referred to, it was really the latter half of the quarter where we start to feel the more larger impact to the pandemic.Having said all of that, our Q1, when we reported out, our DSOs actually improved, particularly in Europe and particularly for those extended terms. And so our DSOs dropped one full day to 42 days. So it gives you a sense that our collections continue to be very strong.You'll see in our 10-Q that we report that are actually our even though our revenues went up, our accounts receivable went down quarter-over-quarter. So that gives you a sense really that right now, we don't see it as an issue. As we look into April, we still don't see it as an issue. And now that we've closed April, but we have a pretty good idea on how we're coming in, in April.And as Charles and I have both alluded to, we feel pretty good about the first month of the new quarter. As it relates to concessions, absolutely, there are customers out there that have asked for concessions. But do remember, our top 50 customers represent 40% of our business, and you know who our top customers are.And so it will be at the far end of the tail, typically that customers will be asking for some type of concession. I to be honest, I don't have the visibility given that it just hasn't amounted to anything significant at that point at this point in time.But we are assuming that there will be customers who will eventually ask for concessions or who already have asked for concessions. Just like you're hearing out in the marketplace from our peers and other like industries. So why don't I stop there, let me pass it back to you, Charles, just on the--

[Charles Meyers:]

Yes. And then maybe on the -- you like to ask for a little maybe more specifics on the book-to-bill. We do see occasionally, some people saying, hey, we were scheduled to implement this and begin billing on this commencement date. Obviously, we're not comfortable having our teams out there to finish that deployment. We'd like to push that out a bit. And so I think there is some of that, again, fairly limited in the grand scheme of things, but I think those are the types of things that we think we -- and we do see some of those.And we're accommodating those requests because we think that's the right thing to do given the situations. But there's a relatively small number of those. And then relative to the churn and EMEA, there was some large footprint churn. I think it's pretty -- it would be pretty typical indicative of it.As I said in our -- in my prepared comments, maintaining our commercial discipline, continuing these were really larger footprint deals, lower-yielding returns on capital and the kind of things where you do continue to see people re-architect towards different solutions. And so nothing particularly surprising there, but a couple that hit in the quarter and caused both a reduction in -- or an increase in churn and a reduction in cabinet adds.But of course, those cabinets go right back into the hopper. And we intend to resell them at a significantly higher price point and margin profile, given what is a really favorable trend on mix of business in EMEA.

[Jordan Sadler:]

Thank you.

[Charles Meyers:]

You bet.

[Operator:]

Our last question will come from Erik Rasmussen from Stifel. Your line is now open.

[Erik Rasmussen:]

Yes, thank you very much. I'll keep it brief then. Just on the JV announcement for your xScale data center built in Japan, can you just comment on how you see this changes your opportunities across the region and your market position?And then with that, who do you see as your biggest competitors in the region? And then just the follow-up there would be, I know you've been focused on international markets, but at what point do you see the U.S. becoming more interesting? Thanks.

[Charles Meyers:]

Yes. I mean, we feel really good. I would say that the -- look, we view ourselves very much as a global platform. And so continuing to extend the strength our strength in key markets around the world and being able to meet a more comprehensive set of our customers' needs across a variety of solution requirements, including the very large footprint, just we think increases our overall global position, not obviously, in market, in Japan, and we think that, as I said, I think given what we see as potential supply constraints in that market and what others customers are seeing as potential supply constraints, we feel really good about our ability to generate utilization and bookings and, therefore, strong returns from our Japan JV.But it is part of a much bigger picture. We have an incredible business in APAC. Being able to serve customers in the primary sort of APAC markets that they're looking to deploy and is a key part of our strategy, and we're excited about the overall trajectory there. And then in terms of the U.S., looking more interesting.Again, I think it continues to be a very highly competitive market with some markets like in Ashburn, for example, at the large footprint end of the spectrum being, I think, in an imbalanced supply and demand situation, which is highly pressuring prices, et cetera.We feel very fortunate that we maintain a very different franchise in Ashburn and have seen tremendous health and strong price durability in our Ashburn -- in our business in Ashburn. But I think our appetite in the U.S. will be more limited for sure.Although I do think that we look at a campus like Dallas with having the potential to add large footprint capacity in immediate proximity to the Infomart, that is a very unique proposition that we would sort of resonate with. So -- but we're going to be very selective there just because we think there's other better opportunities for us around the world.

[Erik Rasmussen:]

Okay. Thank you.

[Charles Meyers:]

You bet.

[Operator:]

That concludes our Q1 call. Thank you for joining us.