Good afternoon, and welcome to the Equinix Second Quarter Earnings Conference Call. All lines will be able to listen only until we open up 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 over the call to Katrina Rymel, Vice President of Investor Relations.
You may begin.
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 identified 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 ks filed on February 21, 2020, and 10 Q filed on May 7, 2020. Equinix assumes no obligation and does not intend update or comment on forward looking statements made on this call. In addition, in light of Regulation Fair Disclosure, is Equinix's policy not to comment on financial guidance during the quarter unless it is done for 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 dot 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 Equinixna 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's 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 up in an hour, we'd like to ask these analysts to limit any following questions to just one. At this time, I'll turn the call over to Charles.
Thank you, Katrina. Good afternoon, and welcome to our Q2 earnings call. As we all continue to navigate various health, economic and social changes occurring in our world, our key priorities remain clear: focusing on the health, safety and well-being of our colleagues, customers and communities and enabling our customers to respond effectively to the increased urgency of digital transformation as a critical business priority and a driving force in the global economy. Even in the face of an uncertain macro environment created by the global pandemic, the Equinix business continues to perform well and our relevance in enabling digital business and connectivity remains a core tenant of customer purchasing decisions. In Q2, we delivered the 3rd best gross bookings in our history, driven by a record quarter in the Americas, continued strength in channel bookings, robust interconnection performance and high volume of small deals.
Our expanding go to market engine continues to fuel the business, generating over 4,200 deals in the quarter across more than 3,000 customers. And the importance of our global reach continues to shine as our customers scale and expand across the globe, leveraging our platform across 56 metros in 26 countries. We're continuing to increase the scope of customer deployments and customers operating in all three regions now represent 62% of revenue, up 1% quarter over quarter. Our organic expansions continue, opening Hamburg this quarter and adding Bordeaux as a strategic subsea landing location in support of a key hyperscale. And we're using disciplined M and A as a tool to enter new markets and scale our platform.
On June 1, we announced our intent to acquire 13 Bell Canada data centers, expanding our coverage in Canada to a national platform and unlocking opportunities for global corporations to capture growth and innovation in the Canadian market. This acquisition, which is expected to be immediately accretive upon close in Q4, reflects Equinix's continued commitment to executing platform enhancing acquisitions on financially attractive terms. Before we get into the detailed quarterly results, I want to share a few thoughts on our commitment to social change and our continued work to build a culture and community that can have a meaningful sustainable impact on the future of our society. Recent events in the U. S.
Have triggered outrage and an outpouring of emotions around the world. We have actively tapped into this energy, fostering a rich and inclusive dialogue on topics of equity and social justice, with a focus on improving our collective understanding of each other and creating a commitment to action, which is imperative to moving us forward positively as individuals, as a company and as a society. While still early in our journey, our vision remains clear for Equinix to be a culture where every employee every day can truly say I'm safe, I belong and I matter. And for our workforce at all levels to better reflect and represent the communities in which we operate. We acknowledge that we have work to do in achieving this vision, but fully committed to demonstrating measurable enduring progress against a multiyear strategy and continue to believe that our culture remains a key competitive differentiator.
Our approach includes traditional aspects such as diversity targets, bias training and mitigation, community philanthropy programs and employee mobilization. But we also believe that lasting change will only happen by pushing ourselves even further in our pursuit of becoming a truly equitable and global organization. Our objective is to continue to make our culture a critical competitive advantage seeking to engage every leader and every employee at Equinix and integrating diversity, inclusion and belonging in every aspect of how we run the business. As a company, we will continue to put in the work and reaffirm our commitment to cultivating a workplace and a society that embraces and vigorously defends equality and diversity. Now turning to our results as depicted on Slide 3, revenues for the Q2 were $1,470,000,000 up 8% year over year.
Adjusted EBITDA was up 9% year over year and AFFO was again meaningfully ahead of our expectations. Interconnection revenues continue to over index substantially, growing 16% year over year, reflecting the important role of interconnection in digital transformation and highlighting our clear market leadership in this area. Unit volume was fueled by growth in provision capacity to support increased traffic and solid new product performance reflecting our ability to meet the evolving connectivity requirements of hybrid and multi cloud architectures. These growth rates are all on a normalized and constant currency basis. We now have over 378,000 interconnections and we continue to see healthy expansion of our dynamic ecosystems across the globe.
In Q2, we added an incremental 8,000 interconnects driven by streaming, video conferencing, enterprise cloud connectivity and investments in local aggregation to support work from home. Internet Exchange had one of its best quarters ever with peak traffic up 44% year over year as the peering community augmented capacity for video conferencing, gaming and over the top video replacing headroom that had been exhausted by COVID related traffic growth. ECX Fabric also had a great quarter, eclipsing 2,200 participants and demonstrating robust multi cloud adoption, particularly from network providers with 1 third of them scaling bandwidth to 5 or more clouds. We're also making good progress in integrating the Packet business with strong new logo engagement and continued go to market integration as we work to deliver on our vision for Platform Equinix to underpin the foundational infrastructure for today's digital leaders. We're also strengthening Equinix's leadership position in the cloud ecosystem through expansion of our hyperscale strategy, allowing us to service both retail and large footprint in key markets, while maximizing the efficiency of our balance sheet through our partnership with GIC.
We're seeing strong customer demand in our initial Xscale JV in Europe and will soon expand this JV to include our 7th asset, Paris 9. This facility is slated to open early next year and is immediately proximate to our market leading Paris campus and is already 100% pre leased to a major hyperscale. We're also tracking to close our new Xscale JV in Japan with GIC in Q4, adding new locations in Osaka and Tokyo. Now let me cover highlights from our verticals. Our network vertical achieved record bookings driven by robust reseller activity and network expansions to support traffic growth.
Expansions included Colt, a global telecom provider adding capacity at the interconnected edge to support increasing user demand as well as Vocus Communications, an Australian specialty fiber and network solution provider deploying infrastructure to increase scale and improve end user experience. Our Financial Services vertical had 2nd highest bookings with strength in global financial and insurance firms as they accelerate digital transformation. New wins and expansions included a leading Nordic Insurance company, leveraging hybrid multi cloud and distributed data and Galileo Financial Technologies, a payment solutions platform re architecting their network and securely connecting the ecosystem partners. Our content and digital media vertical also saw solid bookings with particular strength in gaming and video, driven by the spike in demand for indoor entertainment. New wins and expansions included IOTA, a leading audience technology platform looking to expand their footprint to serve the ad tech industry and Moody's leveraging ECX Fabric to re architect their network and multi cloud access for increased performance.
Our cloud and IT vertical also showed strong bookings led by the infrastructure and software sub segments with continued momentum in cloud adoption. We continue to extend our market leading cloud density adding 10 cloud on ramps this quarter alone. As cloud providers expand services into new metros including Bogota and Mexico City. New wins and expansions included Cisco, extending service capabilities to additional regions to support new product offerings and security and client demand for Cisco WebEx communication solutions and BMC Software, a leading platform provider of digital workflow solutions deploying infrastructure to support their expanding customer base across the region. Our enterprise vertical saw solid bookings and broad based demand with particular growth in businesses and professional services, government and energy despite some COVID related friction.
COVID continues to shift enterprise spending patterns resulting in increased demand for various cloud based services including telephony, messaging and conferencing. New enterprise wins included a Swedish engineering company optimizing its global network to provide optimal employee experience. The Global Spirits distributor switched from building its own on premise data centers to Equinix to support rapid deployment as well as Fung Group, a global leader in supply chain solutions leveraging ECX Fabric to digitize its supply chain ecosystem. Our channel program had a record quarter accounting for over 30% of bookings and delivering great productivity from this go to market vector. The channel program continues to be a new logo engine for the company generating over 60% of all new logos.
We had great wins with reseller and alliance partners, including Orange Business, Cisco, AT and T, Microsoft and Dell across a wide range of industry segments with projects focused on both digital transformation and COVID-nineteen response. New channel business this quarter included notable wins with AT and T for a global insurer transitioning from on premise data centers to a hybrid multi cloud solution to enhance elasticity and performance and the Vodafone for a premier global energy company supporting their adoption of SD WAN and hybrid multi cloud enablement. Now let me turn the call over to Keith to cover the results for the quarter.
Thanks, Charles, and good afternoon to everyone. It's nice to speak with you again. I like Charles, hope you and your families are doing well and staying safe. With respect to Equinix, the business continues to perform well. Q2 revenues, adjusted EBITDA, AFFO and AFFO per share were ahead of expectations despite disruptions experienced by our customers, our suppliers and partners, our employees over the past few months.
In the quarter, we had significant gross PAG and net bookings, including very strong net positive pricing actions. Interconnection activity was very healthy, both at the physical and the virtual level, and we're making solid progress across our new edge services products. Our performance against our key operating metrics was again positive, including solid increases in our MR per cabinet and billable cabinet metrics. For the quarter, we're tracking against our expectations on COVID-nineteen related impact and costs. As expected, there are certain cost trends going both directions and we'll continue to make the appropriate adjustments to our forecast as needed.
And as you've heard us say before, but it's certainly worth repeating again, achieving an investment enabling us to access the debt capital markets expeditiously, while enabling us to access the debt capital markets expeditiously, while broadening the investor base and tightening the credit spreads on our issued debt. This is particularly important during times of great volatility and disruption like today. In June, we refinanced $2,600,000,000 of high yield debt at a blended interest rate of 2.07 percent, the lowest interest rate ever achieved by any BBB- rated issuer. Interest savings on an annualized basis will approximate $50,000,000 and these savings will effectively offset the dilution associated with our 1,270,000,000 dollars equity raise in May. We have an active construction pipeline with 29 projects underway across 20 markets in 14 countries and we continue to work closely with our suppliers and partners to deliver capacity as close to the target dates as possible.
Now let me cover the quarterly highlights and note the growth rates in this section are on a normalized and constant currency basis. As depicted on Slide 4, global Q2 revenues were $1,470,000,000 up 8% over the same quarter last year, our 70th consecutive quarter of revenue growth, including a $3,000,000 net FX benefit when compared to our prior guidance rates. We've seen positive momentum in the first half of the year driven by strong net bookings and price increases, resulting in a healthy recurring revenue uplift, but lighter than planned non recurring revenues due to the timing of customer work and decreased SmartN revenues. Global Q2 adjusted EBITDA was $720,000,000 or 49 percent of revenues, up 6% compared to the prior quarter and 9% over the same quarter last year due to strong operating performance and favorable revenue mix, including a $1,000,000 net FX benefit when compared to our prior guidance rates. Global Q2 AFFO was $558,000,000 above our expectations on a constant currency basis, largely the result of strong operating performance.
We continue to manage the business and support our AFFO per share goals. Turning to our regional highlights, whose full results are covered on Slides 5 through 7. EMEA and APAC were the fastest MRR growing regions on a year over year normalized basis at 16% 10% respectively, followed by the Americas region at 3%. The Americas region saw record gross bookings with healthy pricing and strong exports to the other two regions in the quarter. The Americas growth rate was partially muted by our decision to waive certain smart hand fees and the timing of planned churn.
We expect the Americas growth rate to step up in the second half of the year. We also completed the integration of the Mexico assets and won several key internationally based magnets into our network and cloud verticals as customers start to leverage the value of NetLink's platform into our Mexico markets. Our EMEA region saw strong bookings in the quarter, particularly across a number of smaller and emerging markets, including Dublin and Madrid. Paris continues to perform well, a market that we're seeing an increase in demand and the tightening of supply. Our broad build out initiative across the region remains active.
Interconnection was substantially up on a year over year basis driven by volume and pricing initiatives, and billing cabinet stepped up in the quarter. And finally, the Asia Pacific region saw another very strong quarter of bookings including a record into our Japan markets and the region enjoyed solid exports, particularly into EMEA. APAC Interconnection had a strong quarter with many providers scaling network connections for future growth with higher than average net adds in crossconnect and intrametroconnections. And now looking at our capital structure, please refer to Slide 8. We continue to increase our operating and strategic flexibility through the management of our balance sheet and capital allocation decisions.
Pro form a for the debt refinancing activities, we have approximately $2,700,000,000 of unrestricted cash and investments on the balance sheet for total liquidity, including our available revolving line of credit of almost $5,000,000,000 We will use this liquidity alongside our capital and balance sheet initiatives to opportunistically expand the business both organically and inorganically as we work to maximize long term shareholder value creation. Including the benefit of the 1 $700,000,000 equity transaction completed in May, our net debt leverage ratio decreased approximately 3.3x at Q2 annualized adjusted EBITDA, well within our targeted leverage range. Turning to Slide 9 for the quarter, capital expenditures were approximately 482,000,000 including recurring CapEx of 30,000,000. We had 7 openings in Amsterdam, Chicago, Dallas, Hamburg, Hong Kong, Toronto and Washington DC. This included the opening of Dallas 11, a new IBX completed on the Infomart Dallas campus, which is an interconnection epicenter and a major hub for the Southern U.
S. And we announced 4 new expansion projects, the majority of these projects to be developed on own land, being Bordeaux, Hong Kong, Milan and Warsaw. We continue to expand our ownership acquiring land for development in both Frankfurt and Manchester markets. For the year, we now expect capital expenditures to increase by approximately $150,000,000 which reflects the anticipated timing of the closing of the Japan joint venture with GIC. Once this transaction closes, GIC's portion of the capital expenditure spent prior to the close date will be reimbursed to Equinix, an amount that is expected to range between $150,000,000 $200,000,000 including certain previously incurred costs.
Revenues from owned assets is currently 55%, a metric that we anticipate will increase over the next 18 months. Our capital investments delivered strong returns as shown on Slide 10. Our 100 and 48 stabilized assets increased revenues by 6% year over year on a constant currency basis. These stabilized assets are collectively 84% utilized and generate a 28% cash on cash return on the gross PPE invested. Now please refer to Slides 11 through 15 for our summary of 2020 guidance and bridges.
Turning with revenues, we expect to deliver an 8% to 9% growth rate for 2020, a reflection of the continued momentum in the business and includes a net FX benefit of $23,000,000 compared to our prior guidance rates. Non recurring revenues are expected to remain at these levels for the rest of the year. MRR churn is expected to remain in our targeted range of 2% to 2.5% per quarter for the remainder of the year. We expect 2020 adjusted EBITDA margins of approximately 48%, excluding integration costs, the result of strong operating leverage in the business, including revenue mix, offset in part by the anticipated investments in our go to market and product organizations and higher than initially planned salaries and benefit costs. We expect to incur $20,000,000 of integration costs in 2020 for the integration of our various acquisitions.
And we're raising our 2020 FFO, which is expected to now grow between 14% 18% compared to previous year. For 2020, we expect AFFO per share to grow between 8% 12%, including the effects of the capital market activities completed in Q2. So let me stop here and turn the call back to Charles.
Thanks, Keith.
We are delighted with our Q2 results and are pleased with the continued outperformance of the business, a result of our focus on providing customers distinctive and durable value as they embrace digital transformation. Our impact for customers and the financial results that follow are the reflection of the dedication, flexibility and ingenuity of our teams. Over the course of Q2, we like many others had to rapidly adapt our business, adjusting our go to market motion to current realities, evolving operating procedures while maintaining our exceptional service reliability and executing on highly attractive equity and debt deals to enhance liquidity and drive AFFO. Customers remain at the center of everything we do and our customer satisfaction rating moved up the last two quarters to its highest score in the last 3 years. While we are delighted with how the business is performing, we fully recognize the strain, the shifting challenges and the continued uncertainty we are all facing.
And as such, we will remain diligent in closely monitoring market dynamics and further adapting our business as appropriate through the back half of the year. The secular drivers of demand for digital infrastructure have never been stronger, and we believe that Equinix is uniquely positioned to execute on the expanding opportunity presented by the accelerating importance of digital transformation and the shift to hybrid and multi cloud as the architecture of choice. We remain steadfastly focused on evolving our platform to respond to this unparalleled market opportunity, investing to drive top line growth, leveraging our operating scale to fuel attractive AFFO per share growth to our investors and delivering positive impact to our many stakeholders as we continue to build an enduring and sustainable culture in business. So let me stop there and open it up for questions.
Thank you. We will now begin the question and answer session. Our first question comes from Tim Long with Barclays. Your line is open.
Thank you. I appreciate the question here. Wanted to start off with a smaller newer piece of business with Packet, if I could. It sounds like it's moving along pretty well. Just curious if you can give us an update on how you're moving along with features and the sales force and the channel with the ability to sell the new products?
And maybe just a little color with the business that you're doing now, if you can give us a sense maybe what kind of customers or applications are being sought out by those to take on this new business for you? Thank you.
Sure. Sure, Tim. Thanks. It's Charles. I guess it's important maybe to back up and continue to put the changing consumption patterns of our customers in terms of how they want to the changing consumption patterns of our customers in terms of how they want to sort of gain access to the value, if you will, of the Equinix platform.
And I think we adding the bare metal service that Packet brings to the table and integrating that with the bare metal service that we had under development organically, we think it really represents a big opportunity for us to continue to adapt to those changing needs. The integration is going well. We've now aligned on a coordinated and integrated roadmap for and coordinate that into a single offering that we will deliver as a company. We have continued to integrate the go to market motion and we've actually taken some folks from within the Equinix organization, blended them into the sales team and have that acting as a bit of an overlay today to our larger sales force. Still early days there, and I think probably a lot of the customer activity is with some of the more digitally native targets that Packet had traditionally been serving.
But we're really starting to see a building funnel of enterprise targets, particularly large enterprise targets as well as some service provider sort of types that are really resonating with the packet opportunity and that offering. So, it continues to go well. Again, very still very early days. But one of the things that we've been talking about internally as we talk about delivering physical infrastructure at software speed, which has kind of been a rally cry or a tagline that really resonates with us internally and more importantly resonates with our customers. So again, product roadmap is well aligned now.
The engineering teams are underway on bringing a fully enterprise feature set, the full enterprise feature set to the bare metal offering over the coming quarters. And go to market motion still relatively early, but good momentum in the pipeline.
Okay. And if I could just do a quick follow-up, you talked about pricing, it looks like Europe and Asia saw a pretty good MRR per cabinet ASP growth. Could you just give us a little highlight on why you're seeing better pricing there than I've done? Thank you.
Sure. The key to pricing for us is really continuing targeted discipline in our sales targeting. And we've talked about that for many years now, right, delivering the targeting the right customers with the right use cases into the right IBX locations. And I think we're really doing that well in terms of adapting or delivering against the use cases that are really important to customers right now in terms of hybrid multi cloud implementations, WAN re architecture, distributed security, a number of things that are really highly featured and I think they're digital transformation plans. And when you're doing that, I think you're able to deliver outsized value and therefore get good solid pricing and we're seeing that show up in our yields.
So I think and if you look at it, the way our quarter was composed in terms of bookings, we talked about 4,200 deals across 3,000 customers. That means we're doing a lot of deals, more small to midsize deals, interconnection oriented, ecosystem centric, and that really helps us on the pricing front. In Europe in particular, we're also seeing the effects now as a roll through of the interconnection pricing adjustments that we've made. And I think those have gone really well. Obviously, generally customers don't jump up and applaud when you raise pricing on your services.
But I think in this case, our team has done a really good job of articulating the value that people are getting from interconnection. And I also think we've been very measured and kind of appropriate about how we phase those implementations and those price implementations and roll through in the impact on the EMEA numbers in particular.
Our next question comes from Jon Atkin with RBC.
Two questions. First one probably for Keith. I'm just interested in kind of the medium term margin puts and takes as we think about where you are in Asia Pac now comfortably past the 50% margin threshold. What are the factors to kind of think about at a corporate level of you getting towards those levels over the next several years? And then I have a follow-up on ex scale.
Thanks.
Yes, sure, John. I think overall as it relates to margins, as we sort of said in our prepared remarks, we're sort of we're very pleased with where we are. Pardon me, I'm frogmatically. We're pleased with where we are. Pricing actions have certainly been a net positive to us.
And so that's represented, it's held very well in our gross profit, EBITDA and our AFFO margins. All that said, there's a number of things that are going on in the business. One of the things that we did want to certainly highlight was we want to continue to invest in our go to market and product organization. And this ties nicely back to what Charles really talked about with Packet. So there's an example of where we can continue to drive profitability up.
I think Q2 was I don't want to say it's aberrational because obviously it's an outcome of many, many great things, including revenue mix, where our non recurring revenue came down and as a recurring revenue went up and as a result, you got a favorable mix shift, something that we think will continue for the rest of the year. But the other part is we want to continue to invest in the business and we think we're on our track to deliver against our expectations. Again, I'd refer you back to the June 18 Analyst Day. We believe we can deliver 50% EBITDA margins or greater. I don't think that's ever a question for us.
It's doing it with the right discipline and mindset knowing that we want to continue to invest in the business. And right now, we just see a very substantial opportunity, not only the assets that we have today, the ones we're acquiring, an example being Bell Canada. And so we'll continue to make those investments. And at the same time, I think we can continually find ways to drive more profitability into business if we're not investing in our future growth.
And then I don't know, Charles, if you would have anything to add to that. But my second question was just on XScale and I think there have been maybe some management changes, wanted to maybe get any commentary on that. Any kind of milestones around future JV financings? And then if you could maybe provide a little bit of color or maybe a reminder on the fee structure that you've secured in these agreements, so we can kind of understand more of the impact on AFFO?
Sure, John. Yes, maybe I'll make just a couple of reiterate a couple of comments on the margin side and just again say, I think we're seeing as we've talked about in the past, we're continuing to try to look at driving operating leverage in the business. I think we're being successful in doing that. And then again, we're seeing some positive benefits associated with mix shift. And then again, that's balanced against the reality that we want to continue to position ourselves to take advantage of what we think is a really big growth opportunity in front of us as hybrid and multi cloud really plays out.
And so we will continue to invest in the business. And that will be both the CapEx side and the CapEx side, which I think will be a bit of a moderating factor on the margins. But I think we can continue kind of up into the right over the long haul. Relative to Excale, things continue to really go well in that overall. We did have some adjustments.
Jim Smith has made the decision to step down from his role as Managing Director of the program, but does remain as an advisor to the initiative. And we've asked Krupa Raval, who's been on the XScale team now for a period of time and incredible background and we've asked him to step into the MD role. He's done that and really kept continuity with the team. The team has been recruited in there, I think is incredibly strong, very experienced and has really started to hit their stride. So, it's going well.
We talked about in the script that we are probably likely adding or very soon adding the Paris 9 asset that is 100% pre leased to hyperscaler. And we continue to see good customer interest in pipeline on the other facilities. The JV in Japan has now been announced. We're working towards closing that later in the year. And then we're looking at additional JVs beyond that.
So good momentum overall. And then relative to the fees, maybe I'll let Keith comment quickly on kind of how that's structured and impact on the business.
Sure. So, John, just as it relates to the fees, there's really 4 primary fees. So put aside the equity ownership, right now, we're treating the businesses both looks like the Japanese JV will be an equity oriented investment, likewise the initial EMEA JV. And so the way it works is there's basically an asset management fee, a facilities fee, a development fee and a sales and marketing fee. And when you break those down, some non recurring.
And then the benefit we get from the profitability created by the joint venture that comes in below the line through income from an affiliated entity. So that's how it sort of the fee structure works right now. It's still pretty early on as you know, because we've just got the first two assets up. Charles alluded to Paris 9 and having that 100% pre leased. And we're actively engaged across a number of other assets, both in development and also in the marketing of those assets across the platform.
So we're pretty excited about the performance that our group is going to take leadership role in this entity. So great progress to date.
Thanks very much.
Thank you. Our next question comes from Colby Synesael of Cowen. Your line is open.
Great. Thank you. Just a few. Last quarter, you called out a $0 to $50,000,000 headwind to guidance revenue guidance for COVID-nineteen. I was wondering what the headwind or impact was in the Q2 and if you still feel that you're going to be within that 0 to 50 and maybe you could tighten that up a little bit if possible at this point.
Secondly, your Americas growth missed our estimate. I think that was probably one of the weaker parts of the quarter. Keith, I know you mentioned the smart hand wave fees, but I think that's just a $3,000,000 impact. And on the churn side, when I look at least the cabinet and the interconnects, both those numbers still went up, yet the revenue came down, which just seems to me seems to suggest more of a pricing impact. So I'm trying to get a better understanding there.
And then before Katrina kills me, just one last one. Your previous guidance on organic growth was 7% to 9%. You raised it to 8% to 9%. And I believe that excludes FX. Yet the only change I saw in your guidance was in fact FX.
I'm wondering where that extra 1% to 8% of the low end came from. Thank you.
Charles, do you want me to take the first part? I just want to make sure, because we're in different locations, everybody. So just making sure that we're going to organize accordingly. Let me first start off by saying, look, we're absolutely delighted, Colby, with the performance of our business for the 2nd quarter. And as you know, when we went into the quarter, we give ourselves a relatively wide range, wide berth from 0 to 50.
And for this quarter, as you know, we basically delivered slightly above the top end of our guidance range. So said differently then, we basically got a lot of flexibility through the second half of the year. And we chose to leave it intact other than FX, very similar to what Charles did last quarter. He made the reference to the fact that we're going to adjust for currency and here's the range of $0.50 and but we're also going to hold, absent FX, we're going to hold AFFO. We're going to target at midpoint.
Well, when we look at the second half of the year, there's just a lot of uncertainty that still remains, not too much in our business per se, but the reality of how all of the turmoil gets manifested into our results, we let that flexibility inside our guide. And so what you're seeing is not per se any specific headwind. On the margin, there's a few adjustments that are affecting us. We obviously have slightly larger bad debt reserve than we had before, but that was planned for. I made some reference to the fact that there's costs going both directions.
Clearly, our travel and entertainment is relatively low to 0. But offsetting that, of course, is our salary and benefits costs, less attrition, less paid time off. And we're doing a very good job of hiring the staff that were slated to be hired. And so our salaries are a little bit higher. So I think that sort of deals with perhaps the majority of the discussion other than the Americas.
Americas, as we said, relatively flat this quarter. Colvin, you're right. There's $3,000,000 of Smart Hand fees. There's also the impact of the Brazilian currency, fairly substantial degradation to an unhedged currency. And then you've got non recurring revenues.
When you look at it from a pricing perspective, though MRR per cabinet was relatively flat quarter over quarter. And so we're delighted with where we are. We alluded to the fact that pricing was strong, good gross bookings. We have momentum in the business, but you also have some things, timing of churn and the Smart Hands plus non recurring in Brazil all affecting the results. And that's the benefit we get therefore of having a very global and diverse set of assets that things are going to move around on a continuous basis.
In this case, you're starting to see currency trends moving in our favor. And so albeit we might be a little bit more susceptible to weaker currencies in the Americas, you're going to see you're seeing uplifts in Asia and in Europe. So let me stop there. Charles, you jump in if there's anything you want to add or if there's anything you need to clarify.
No, I mean, I think again on the 0 to 50, obviously we saw the smart hands impacts across the regions in the quarter as well as a fairly meaningful impact on our custom NRR. And so but so the NRR was meaningfully impacted. I think we had a strong recurring revenue quarter. Bookings were solid. We are seeing some level of friction still out there.
But as our results imply, the team powered through that and had a good quarter. But we have 2 sort of big step up remaining in front of us in the back half of the year. And as we looked at that, we and plus I think a very uncertain environment still in terms of sort of a second wave, if you will, on COVID and the implications of that and how the protracted economic impacts are going to begin to affect companies, etcetera. We felt like it was prudent to sort of maintain the revenue guidance and just book the FX impacts into there. So that's where we landed.
Okay. Thank you.
Thank you. Our next question comes from Frank Louthan with Raymond James. Your line is open.
Great. Thank you very much. So talk to us a little bit about more in the Americas. We've talked in the past about what's going on with the Verizon space and how that leasing is going. Talk to us a little bit about that.
And then, follow-up, thoughts on inorganic growth for the remainder of the year. I know you've already done one deal clearly not shying away, but what are your thoughts on those opportunities? Thanks.
And Frank, I'm sorry, the first one was on Verizon and Verizon assets?
Yes, the Verizon assets and where you are as far as continuing to fill that space out to maximize utilization there?
Yes. Again, it's been a good long time now that we've kind of integrated. So we tend to think about them all as really part of the platform now. So it's tough for us to think about or even fully measure that. But we are seeing good utilization.
Obviously, we made some investments into some of the assets. We actually had some really strong deals this quarter into Miami and Culpeper actually. And so we're seeing good progress on some of the very key assets there. Overall, as we said, I think that the Americas business, we expect that to step up to more like a 5% growth rate in the back half of the year. Again, it was a really solid quarter from a bookings perspective.
And so overall, I think with us starting to I think really having worked through the issues on the Verizon portfolio in terms of the churn and the things that have happened there and seeing that stabilize, I think we're looking at a solid back half of the year for the Americas there. And relative to inorganic, I think that there are plenty of our our strategy remains unchanged. We have used M and A for market entry, for market scaling, for sort of capturing strategic interconnection assets and now for sort of capability additions as we look at the future of platform Equinix and what that means. And I think there are opportunities in all those categories. Obviously, the Canadian deal was really an terms of new market entries that are areas that we are continued to be focused on that are potentially actionable out there.
And so and it's one of the reasons really that we went and did the equity deal is making sure that we kept some dry powder on the balance sheet to be appropriately opportunistic about growth opportunities that present themselves.
All right, great. Thank you.
Thank you. Our next question comes from Michael Rollins of Citi. Your line is open.
Thanks and good afternoon.
I was curious if you could delve a bit more into what you're seeing out of the enterprise vertical in terms of the ability for them to make decisions and the growing interest that the management team been describing that you're seeing for hybrid cloud architectures? Thanks.
Sure. Thanks, Mike. Yes, I think that
we're seeing a there's a
few things. One, I do think that we've seen some projects delayed decision making, so things pushed out further in the pipeline. But I think that's been offset to some degree by a broader realization that I think you've heard us and probably many other companies in ours and related spaces, for example, the cloud providers talk about this elevation of awareness around digital transformation and the priority that exists there even in sectors of the economy that are meaningfully impacted by COVID. I think that what people are seeing is that those companies that were better prepared or further ahead in their digital strategies are weathering the storm better. And I think that that's leading people to say we've got to make that investment.
In some cases, even if their businesses are a bit on their back, they kind of say, look, we're going to take that medicine, but we're going to invest in the business and in the future, and make sure we're making the digital investments that are necessary. So that is I think we are seeing a little bit of sort of both sides of the coin there, which is some delays, particularly new projects that might be delayed just by a variety of factors, including taking longer to be able to visit sites although they are we are now having tours and visits into the sites on an appointment basis. And so we're sort of freeing up some of the wheels are turning on that. But there is some of that. If you look at new logos, they're a little bit lower than our pre COVID levels.
But we also are there targeted more at larger accounts with bigger wallet sizes. And so a little bit of a mixed bag, but on balance, I think what the enduring phenomenon that we think we're really seeing is this increased commitment to digital and also very much in terms of people saying, look, we still have private infrastructure requirements. We want that private infrastructure over time to be it is probably going to be smaller than what we are doing now, but we need what remains to be immediately proximate to the cloud and deliver both performance and economics in a different way. And we think Equinix really rises to that challenge for them.
Thanks.
Thank you. Our next Thank you.
Our next
question comes from Matthew Niknam with Deutsche Bank. Your line is open.
Hey guys, thank you for taking the questions. Just 2 if I could. First, maybe to go back to the last question. In terms of sales cycles, any notable delays during the quarter that you'd call out that may deferred some bookings into the Q3? And then secondly, on the competitive front, if you can talk about the competitive backdrop in Europe, whether you've seen any changes in the landscape in recent months after some of the recent M and A, larger scale M and A in the region?
Thanks. Sure. As I said, yes, we have obviously, we've got a very sort of deep command of the pipeline in terms of deals that are in there. We did there were certainly some opportunities that we had originally as targeted to close this quarter that pushed out, but that's the case every quarter. Obviously, there's some of that.
And but some of those were, but people would chalk up to COVID related sort of delays in decision making. But on balance, when you look at it and you see our 3rd best gross bookings quarter ever, a record in the Americas, Obviously, we've been able to sort of power through some of that and still deliver strong overall bookings results. So there's some of that. What we are seeing, I think, quite encouragingly is that those are just delays. They're not cancellations of projects.
And at this point, we think it's just a matter of when we're going to bring those opportunities in. So on balance, I think feeling very good and feel like the team really rallied and delivered an exceptional quarter given the broader circumstances that we face. In terms of the competitive backdrop, I would say not a meaningful change. I feel like particularly in I know relative to commenting on the sort of post interaction, digital combination in Europe and impact there. I would say it still very much seems to be in a digestion phase.
And I think customers are working to sort of figure out what that means for them. I think employees of those companies are trying to or now that company are trying to figure out what it means for them. And we're trying to stay focused and deliver and execute effectively, while that digestion occurs. And so, I think our obviously, the performance of our business in EMEA, sort of speaks for itself in the quarter. And we continue to as I've always said, InterXion was always a very credible competitor for us in Europe.
And I expect they will continue to be 1. But we are right now, I think we're seeing a digestion period and we're trying to take advantage of that while it exists. Thank you.
Thank you. Our next question comes from Simon Flannery of Morgan Stanley. Your line is open.
Great. Thank you very much. Good evening. Coming back to Excale, I think when you were talking about the project initially, you talked about mid teens type returns. I wonder if you could update us on what given you've done some leasing now, you've got a better sense of pipeline and economics.
What's your latest thoughts on the return profile on these projects? And just coming back to the enterprises, what's going on, on the renewal side? What sort of pricing are you achieving on renewals? Obviously, your pricing commentary has been pretty bullish overall, but we do see a lot of pressure on IT budgets broadly. And are you seeing any of that coming through in terms of customers trying to get some relief when they renew with you?
Thanks.
Sure.
Yes, I would say that relative to ex scale and return expectations, I would say that when you look at it, we obviously get some of the benefit, particularly as it relates to our lens on the returns of both fees flowing through as well as the development returns, which give us a bit of a lift on the returns overall. And I think will allow us to continue to have those into the double digits. I do think there is some pressure on returns caused by just an overall pricing environment that continues to be aggressive, I think, in terms of people competing aggressively for the hyperscaler business that is out there. So I think there's been probably a bit of pressure there, but I think that it continues to be a very attractive return profile. I think for our both for us and for our partners.
And for us, I think being able to do that with relatively limited sort of dry powder off our balance sheet, which we want to allocate to our higher returning retail business, I think the strategy still makes a ton of sense for us. But I would say some downward pressure on returns. It will be interesting to see whether that persists. I do think that Keith mentioned, for example, there are markets where we see supply tightening and obviously that tends to improve pricing. But you do have a very powerful set of customers in the hyperscalers that are looking to sort of get the best available terms.
So think there's been a bit of downward pressure there. Relative to enterprise renewals, as I said, what we're seeing, I think, is generally people are continuing to figure out how they can make most effective use of Equinix in pursuing their long term hybrid multi cloud architectures. And so that might mean that people are downsizing sort of elements of their architecture as they move certain applications to cloud and then focusing their private infrastructure or the private part of their hybrid cloud into Equinix facilities proximate to the cloud and are still willing to renew those at what we consider to be very attractive rates that are good for us and deliver significant value for the customer. We do see some sawtooth ing, which is because we have escalators annual escalators built into our contracts virtually across the board. Oftentimes when you see a renewal, you might see that if you implemented a 3% to 5% annual escalator over a say a 5 year contract that at renewal you may be above market and you may see a sawtooth thing of that occur.
But that's all sort of part and parcel or all included in our overall model, which again continues to reflect overall positive net pricing actions, which we think reflects the value that we deliver for customers. Great. Helpful. Thank you.
Thank you. Our next question comes from Jordan Sadler of KeyBanc. Your line is open.
Thanks and good afternoon. So just wanted to come back to Excale one more time. It does sound like you characterize the overall bookings is solid and seeing maybe a little bit of friction because we talked to maybe overall enterprise. Would that also that characterization pertain to the Xscale business as well? And was, Paris 9 leased during the quarter?
Yes. I would say the I think the dynamics are a little bit different in that obviously we're targeting a much smaller set of customers. And so when you look at the Xscale dynamics, I think it's a bit more about where these hyperscalers are in their expansion, how that matches up relative to a sort of capacity where it's needed kind of element. And so if you look at hyperscalers and we're actually if you look at the performance and results of some of the other companies that are more focused on that, they tend to be lumpy. They have sort of a bit more boom and bust in their quarters based on the timing of sale timing of bookings and kind of where hyperscalers are in their cycles of expansion.
And so I think the dynamic is a bit different. But yes, the leasing was completed in the quarter for Paris 9. And so we were very pleased to get that done and we do see a strong pipeline. It just takes those are a bit bigger and more complex deals with longer sales cycles. And I think the results in any given quarter tend to be a bit lumpier.
Okay. And then just as a follow-up, I think you touched on interconnection pricing in Europe, the adjustment that you've made there. Where are you in the
roll out of those adjustments? And what's sort
of the magnitude of that pricing adjustment?
We are reasonably well advanced. I think that we'll continue to see those adjustments flow through over the course of the next year or so, because we try to be fair and balanced and not kind of overly aggressive or greedy about how to the timeline on which we wanted to implement those and as we tried to as we talked to our customers and tried to implement something that we thought was fair and balanced. And so it will continue I think through the course of the remainder of this year and well into next year, I think probably through the course of next year as well. But I think we've probably seen a good chunk of that, probably more than well more than half of that roll through and begin to into our results. But there is more work to be done.
I think it will be a bit slower as we go through the course of the next several quarters. And in terms of magnitude, I forget what the percentage increase It was meaningful and that is showing up in the results. But again, you still are seeing interconnection prevailing pricing in Europe meaningfully below what it is in the Americas. And I don't think we will be in a point where we will equalize that. We are making progress in terms of delivering pricing that's more consistent with the value delivered to the customer.
Okay. Thank you.
Thank you. Our next question comes from Nick Del Deo with MoffettNathanson. Your line is open.
Hey, thanks for taking my questions. First, Keith, I want to drill down a little bit more on the EBITDA beat, which was pretty meaningful. I think you suggested it was a function of revenue mix. And you said you expect those mix benefits to continue, but your guidance implies lower EBITDA in dollar terms in the next couple of quarters relative to Q2 and margins that are quite a bit lower. Was there anything else besides the mix shift that we should be bearing on like power costs or anything along those lines?
Overall, when we look at the second quarter specifically, there is we made a comment about price increases across the board. So number 1, it was good to see that. But most of that was really focused in the EMEA region. And then offsetting that was non recurring revenue. You saw the step down to roughly 4.8% of our revenue of non recurring.
And so that comes at a different margin profile. So you've got the benefit of those two things happening. So revenues are roughly at the high end of our guidance range on a currency neutral basis, but the mix is favorable and you saw the benefit of that going to the EBITDA. In addition, what you we also saw was some moderation in our utility consumption. And so we got some benefit attached to that.
And then in some of the markets, particularly one I'll refer to is Singapore, there's a something like concession due to the current climate and those concessions come through in a couple of different fashions. There's tax abatements, it is rent abatements, in some cases, it's salary adjustments. It is not you don't apply for it, you are allocated and the company was the recipient of certain dollars from the Singaporean government as an example. But overall, I would just say, look, we're on top of our numbers. I think the look forward is, as Charles alluded to it, it's giving us the flexibility to look at the next two quarters, invest in the places that we need to and therefore that's why you see revenues are moving up nicely, but we're also keeping the cost model at roughly 48% pre integration costs.
And that gives you a sense of that we're still spending in the areas go to market, new product. The other thing I did, I referred to in at least one of my prior remarks, salaries and benefits are going up inside the business. And that's not because that was something that was sort of an implication coming out of the pandemic. Less people are taking vacation and that and how it gets represented in the financials, something that we want to certainly encourage people taking more and more time off. And also just the timing of our hiring, as we're getting the full quarterization of the hiring, we had a record hiring quarter in Q2, 400 net adds to the business in the quarter and that's going to run through the quarter the next two quarters as well.
And the last thing I would say, there's some seasonality built into our spend, particularly around recurring CapEx, Q4 more specifically. And that's why you see the impact coming through our guide on the AFFO as well. So overall, we look at it on an annual basis, we're allocating the dollars appropriately, some of it just a little bit more front loaded than originally anticipated and you'll get the full quarterization impact of
it. Yes. And I guess I'd just
reiterate the S and B, the salary and benefits piece of that, which is we are 1, we're seeing lower attrition. I think that's partially due to maybe concerns about the pandemic also. I think it is just a reflection of people sort of being very excited about where we are and the culture and what the opportunities in front of us are. But that I think that's rolling through in ways and we're hiring we're moving forward with our hiring plans across both go to market product technology because we believe the opportunity is really big in front of us. The net impact of that in terms of is that we have more cost on the books.
And I think that we're kind of calibrating on that in terms of pace of hiring and that kind of thing. But we're even if we were at the same sort of targeted number of heads, where with the attrition being a bit higher, it's you get some time in there where it takes to rehire and that sort of keeps things a little lower. So we are seeing a little bit of that, and I think that's part of what is impacting that in the back half
of the year. Okay. Got it. That's great detail. Maybe one quick one on ECX Fabric.
I think earlier this year, you dropped a node into a partner facility in Belgium, which is the first one you've done like that. Any initial insights into how that's going or updates as to whether we'll see more deals like that?
It's still very early days. We have not seen and I think it's obviously happened right in the teeth of the pandemic. So I think probably still too early to tell there. I would say that I think that the broad more broadly speaking, our thinking about how we want to extend the utility and the reach of ECX Fabric, both within our facilities continuing to do our build outs, align this ECX fabric closely with our packet offering to make a more powerful edge offering in our own facilities. And then I think also look to potentially position that as something to be deployed in non Equinix facilities.
And so I don't know that it would look exactly like what we did in Belgium, but I do think the notion that we would be looking at extending the reach of the ECX Fabric and ensuring that the ability to use ECX Fabric as a way to plug back in from a bit of a further edge back into the ecosystem, in particular the cloud ecosystem, something that we are absolutely actively looking at. So I do think that's something that we'll be continuing to monitor and look at how to do that over time.
And our last question comes from Brett Feldman of Goldman Sachs.
Improved revenue growth in the Americas in the back half of the year. And last quarter, you were talking about growth improving to something in the range of 5% or maybe even better than 5% as you were getting into the Q4. I think that's still the what's embedded in your outlook based on your commentary, but I just want to clarify that you're still targeting that 5% and then whether it's 5% or anything, it seems like it's going to be better. And I just want to be sure we understand where the momentum is coming from, the extent to which it's in MRR as opposed to non recurring, Thanks.
Keith, do you want to grab that?
Yes, I'll take that, Charles. So yes, the reference, Charles already said earlier on, but in my prepared remarks, I said the second half of the year. And Q3 looks like the quarter that we would see that step up. And goes back to our comments. Number 1, we saw good pricing.
We saw record bookings. We still see some element of churn inside of the Americas business for the next two quarters. That all said, when we calibrate across the remaining part of the year, we firmly believe that between the pricing and the momentum of the business, including a strong pipeline, you should see a step up in the growth rate. And that's something that, from our perspective, it would carry on into 2021. Still a bit early to give guidance on that, but there's no reason why we wouldn't see that momentum continue.
Thank you.
That concludes our Q2 call. Thank you for joining us.