J.P. Morgan: Equinix’s new orders hit a record: price increases drive growth as expansion spending weighs on cash flow

What do record orders reveal?

Equinix’s annualized gross new bookings reached 533 million dollars in the third quarter, exceeding 500 million dollars for the first time and rising 25.7% from the previous quarter, above JPMorgan’s expectation of 450 million dollars. The bank believes the normal quarterly level could rise to 350 million to 450 million dollars, up from 300 million to 350 million dollars before the second quarter of 2025.
The company said pricing on new deals rose 12% year over year. JPMorgan believes contracts typically run for 2 to 4 years, with large deals lasting as long as 3 to 5 years, so higher prices are expected to be reflected gradually in revenue over several years as older contracts come up for renewal.
Third-quarter customer churn was 1.7%, below the company’s historical range of 2% to 2.5%. Management expects it to return to the historical range in the fourth quarter, while JPMorgan believes tight capacity could keep churn relatively low in 2027 and beyond.

Third-quarter revenue was 2.571 billion dollars, up 11% year over year and above JPMorgan’s expectation of 2.55 billion dollars, with strong performance in Europe, the Middle East and Africa and in Asia-Pacific. At constant currency, revenue from mature same-store operations rose 7% year over year, and cash gross profit rose 8%.
Adjusted EBITDA was 1.321 billion dollars, up 15.1% year over year and 2% above the bank’s forecast; the margin was 51.4%, 0.6 percentage points above expectations. Adjusted funds from operations (AFFO) per share were 11.64 dollars, above the bank’s forecast of 10.46 dollars.
Growth was uneven: recurring revenue in the Americas was 1.093 billion dollars, below the bank’s forecast of 1.108 billion dollars; the number of new interconnections worldwide in the third quarter was 6900, also below the 9700 recorded in the second quarter.

Management raised the midpoint of its 2026 revenue guidance by 100 million dollars, of which 84 million dollars came from the underlying business and 14 million dollars from exchange rates. This implies year-over-year growth of approximately 12%, versus the previous range of 11% to 12%. The midpoint of adjusted EBITDA guidance was raised by 70 million dollars, with a margin of approximately 51%.
Management attributed the margin improvement to price increases, renewals and additional sales to existing customers; greater selling and administrative expense efficiency as scale increased; standardization and automation; and construction cost controls. On that basis, JPMorgan maintained its overweight rating and raised its December 2027 price target from 1300 dollars to 1350 dollars.

The company added expansion projects in New York and Amsterdam in the third quarter. Management said projects on the expansion list had cleared permitting hurdles and power was largely secured; most construction is on campuses with existing data centers or industrial facilities.
Full-year capital expenditure guidance remained at 5 billion to 6 billion dollars, including 4.7 billion to 5.7 billion dollars in non-recurring capital expenditure. Third-quarter capital expenditure reached 1.558 billion dollars.
Expansion investment means profit growth and cash-flow pressure coexist: JPMorgan’s valuation model forecasts free cash flow after interest of negative 1.459 billion dollars in 2026 and still negative 778 million dollars in 2027.