Citi: Equinix new deal pricing rises 12% as Citi sees recurring revenue growth in 2027

What changed in orders and pricing?

Equinix’s total third-quarter sales activity, including orders and presales, rose 38% year over year. Orders totaled 533 million dollars, up 35% year over year; the company has achieved about 60% of its fourth-quarter order target, and its sold but not installed backlog reached a record.
Pricing on new deals rose 12% year over year, and renewal prices for existing contracts are also increasing. Citi believes most lease revenue may come from one-year contracts, and repricing at renewal could improve revenue from existing assets in 2027; the company may also proactively allow some customers to leave, freeing up capacity to re-lease at market rates.
The company raised its 2026 guidance. Citi is positive on third-quarter results, the fourth-quarter outlook and prospects for 2027, and believes recurring revenue growth could approach the upper end of the company’s long-term annual target of 10%–13%.

The company expects development project deliveries to exceed the original target by 40% and to maintain a high delivery pace over the next few years. About 13 thousand cabinets are expected to come online in the fourth quarter, of which about 20% have been presold; customer commitments have been secured for 15% of 2027 retail capacity.
Overall utilization is currently 78%, below the 83% level of the mature asset portfolio. The company is putting underused capacity to work across different markets, with preliminary positive results in five pilot markets.
Third-quarter monthly recurring revenue churn was 1.7%, below the company’s target range of 2.0%–2.5%; renewal timing, proactive renewals and tight capacity all contributed.

Stabilized revenue from the interconnection business rose 10% year over year. Equinix believes the growing presence of AI model providers could drive demand for connections between customers; Inference Exchange and Fabric One, launched during the quarter, also aim to support interconnection growth.
Citi believes the number of AI-related network nodes has risen to 150, and deployments by frontier model labs show early signs of increased interconnection density. However, emerging cloud providers still contribute less than 2% of monthly recurring revenue, so AI’s direct contribution to existing revenue remains small.

The company expects its fourth-quarter EBITDA margin to increase by 140 basis points year over year, although fourth-quarter margins have historically been seasonally lower. Citi maintained its buy rating and price target of 1,260 dollars per share.
Citi notes that new projects require substantial investment and capital expenditure may rise during the reinvestment cycle; long-term capital intensity and growth investment may also cause metrics such as adjusted funds from operations to overstate long-term free cash flow. Pricing and demand for colocation space and interconnection below expectations would also affect its growth assessment.