Equinix is building faster than planned, and borrowing more to pay for it

Equinix rents space, power and network connections inside its data centres to companies that want their servers close to clouds, carriers and their own customers. In its results for the September 2026 quarter it raised its full-year guidance for the third consecutive quarter by its own count, each raise measured against the latest guide, since FY26 guidance was first set. Alongside the raises it is building faster: the company now plans to deliver nearly 40% more cabinets this year than it first intended, and expects total revenue to grow about 12%.

That capacity is paid for before it earns anything. Guidance for capital spending, which excludes the xScale joint ventures that build for the largest cloud companies and purchases of real estate, has gone from $3.7-4.2 billion at the start of the year to $5-6 billion now. Cash from the business has grown far more slowly. Calculated from the cash flow statement, operating cash covered 69% of purchases of plant and equipment in the first nine months of the year, against 96% a year earlier.

The difference has been borrowed. Net debt, meaning borrowings less cash and short-term investments, reached 4.1x annualised adjusted EBITDA, which is earnings before interest, tax, depreciation, amortisation and other items the company excludes. That is the highest of the seven readings Equinix has given on its results calls since February 2025.

Management said leverage would go up. In July the chief financial officer, Olivier Leonetti, said it would rise by about a turn over its multi-year plan, and with these results he said Equinix intends to "double the size of our portfolio with only a modest leverage increase". The pace is what stands out: half of that turn arrived in a single quarter.

Some of the jump is timing rather than new borrowing. The second quarter carried almost twice as much non-recurring revenue as the third, so its annualised EBITDA was higher; measured on that quarter's adjusted EBITDA, the same net debt works out at 3.9x, calculated from the release. Equinix also finished the quarter with $1.4 billion more in cash and short-term investments than at the start of the quarter, ahead of a fourth quarter that management expects to be heavy with cabinet deliveries.

The case for carrying more debt rests on the gap between what Equinix pays to borrow and what its buildings earn. The blended rate on its existing debt is 3.2%. Chief executive Adaire Fox-Martin said the stabilised data centres, the mature part of the estate, returned 27% on the cash invested in them in the quarter, and that the company expects to earn similar returns on new capacity. Pricing gave that case fresh support. "Pricing on new deals was up 12% year-over-year in the quarter," she said. Churn, the share of monthly recurring revenue lost to departing customers, was 1.7% in the quarter, below the bottom of the range management kept for the rest of the year.

That support has limits. The pricing figure came from management's remarks to analysts; the written results release speaks only of strengthening pricing. Fox-Martin also said Equinix may choose to let some low-priced customers go on purpose, so churn could rise by design. The return figure describes the mature, largely filled part of the estate, not the capacity being added now. So far, earnings have kept up with the cost of the extra debt: interest expense rose 27% on a year earlier, and operating income by almost exactly as much.