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 and Sustainability. You may begin.
Good afternoon, welcome to today's conference call. Before we get started, I'd like to remind everyone that some of the statements we're 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 19th, 2021. 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 FD, it is Equinix's 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 these 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 on 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'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 Meyers.
Thank you, Katrina. Good afternoon, welcome to our first quarter earnings call. We had a great start to the year, delivering one of the strongest net bookings quarters in our history, fueled by strong demand across our platform, our lowest churn quarter in many years, and continued momentum in our Americas business. With the addition of the Bell Canada assets, we are now the market leader in 19 of the 26 countries in which we operate, we are delighted to now be the market leader in retail colocation across all three regions of the world, taking the number one spot in Asia Pacific for the first time this quarter. Our bookings performance continues to highlight the consistency and scale of our go-to-market engine, executing 4,300 deals with more than 3,200 customers.
We have a robust build pipeline to support this demand, including 36 major projects underway across 28 markets in 19 countries, one of our most active build years ever. We fully recognize that COVID remains a very acute issue, with continued tragic impacts in key markets around the world, including India and Brazil. Our hearts go out to our colleagues and customers in those markets, and we are actively taking steps to support those communities. As we navigate toward a post-pandemic world, we believe Equinix remains uniquely well-positioned. Digital transformation continues to accelerate, and businesses across a broad range of verticals are recognizing that their infrastructure can be a key source of competitive advantage in an increasingly digital world.
Demand is as strong as ever, with global IT spend expected to rebound above pre-pandemic levels as enterprises increase hybrid cloud spending and service providers build out their delivery platforms to tap into this demand. Against this backdrop, we remain focused on the clear set of priorities I outlined at the start of the year: investing in our people and culture, simplifying and scaling our business, accelerating our digital services, and expanding our global reach, both through our retail footprint and our rapidly growing xScale business. While we are delighted with our business results, we are also highly attuned to our responsibilities as a market leader and continue to advance a bold sustainability agenda across all dimensions of ESG. Supporting our people and strengthening our culture continue to be foundational to our strategy.
In a time where it matters more than ever, our vision remains clear: for Equinix to be a place where every employee, every day, can confidently 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. In early April, we hosted our second annual Days of Understanding, where thousands of our employees around the world attended workshops to listen, learn, and promote a culture of mutual understanding and inclusion as we continue to build and foster an engaged, diverse workforce. Our people show up every day inspired by our purpose: to be the platform where the world comes together, enabling the innovations that enrich our work, life, and planet. As we pursue this purpose, we are also deeply committed to our role as an important component in greening digital infrastructure.
We recently published our 2020 corporate sustainability highlights. I am proud that Equinix once again achieved more than 90% renewable energy coverage for our global data center footprint and received an A-minus score for our CDP Climate Change Survey, a leading environmental rating system focused on climate-related transparency and action. In January, we announced, alongside other providers, the formation of the European Climate Neutral Data Centre Pact, committed to ensuring data centers in Europe are carbon neutral by 2030. We continue to invest significant resources in our ESG leadership and will roll out additional global ambitions over the coming quarters in both our environmental and social initiatives. Turning to our results as depicted on slide three. Revenues for Q1 were $1.6 billion, up 7% year-over-year. Adjusted EBITDA was up 10% year-over-year. AFFO was meaningfully ahead of our expectations.
These growth rates are all on a normalized and constant currency basis. Our leading interconnection franchise continues to perform well, with revenues substantially outpacing colocation, growing 13% year-over-year, driven by the continued strength of Equinix Fabric. We now have over 398,000 interconnections and added more organic interconnections year-over-year than the next 10 competitors combined. In Q1, we added an incremental 6,700 interconnections fueled by hyperscaler build-outs and strong enterprise demand, offset by a slight seasonal increase in network grooming activity. Internet exchange saw peak traffic up 9% quarter-over-quarter and 28% year-over-year, driven by the cloud and network segments. Equinix Fabric also saw strong growth driven by expanded use of our inter-metro offering and continued diversification of end destinations. More than 2,500 customers are now on Fabric, and we remain focused on driving higher attach rates for this product across our platform.
We're also seeing strong customer interest in our Equinix Metal offering and continue to deliver on our commitment to expand the availability and feature set of this offering, enabling as-a-service consumption of our value proposition across 18 global metros. On the xScale side of our business, we're accelerating our pace and continue to make meaningful progress on our ambitious plans for 2021, as rapid growth of the digital economy drives increased demand for global cloud connectivity. With our xScale facilities, hyperscale companies can add large footprint core deployments to their existing network and on-ramp footprints at Equinix, enabling faster time to market and offering direct interconnection to a vibrant ecosystem of their customers and strategic partners. Our more than $3 billion program, financed with the support of our JV partners, will develop over 290 megawatts across our first two JVs, with several more already in the works.
We are broadening our reach with the first building of our DB5x campus, which is JV-ready and already 100% pre-leased to a major hyperscaler. Additionally, after quarter end, we pre-leased our entire London 11 asset. These two deals alone represent nearly 40 MW of capacity, fully committed in advance of delivery. Now let me cover highlights from our verticals. Please note that we updated our customer segmentation approach to better reflect industry classifications and use cases, as well as combined our financial services and enterprise segments to reflect the true scale and momentum of the enterprise opportunity. Going forward, we'll report under these four key verticals. Our network vertical saw strong bookings led by the previously mentioned strength in the Americas as firms expand their capabilities and capacity for digital business and momentum begins to build for industrial 5G applications.
A meaningful part of our network vertical is resale, an indication of the momentum of our channel efforts as we work with partners to deliver more complete solutions to support enterprise digital transformation. Expansions this quarter include British Telecom, a leading telecommunications provider, optimizing network and connecting to multi-cloud for their global enterprise end customers. Alestra, one of the first Mexican cloud service providers leveraging Equinix Fabric to provide a multi-cloud product offering. SubCom, a leading subsea cable system development firm deploying a cable node to establish the first route between Oman and Australia. Content and digital media achieved solid bookings as indoor entertainment continues to drive activity in the social media, gaming, and streaming platforms.
Expansions included marquee wins like Roblox expanding across Platform Equinix to support their rapidly growing user base and big data requirements, as well as a global edge cloud provider expanding capacity and deploying network nodes to support accelerating demand for video content. Our cloud and IT vertical delivered strong bookings led by hyperscalers continuing their global growth. It's worth noting that these bookings results do not include the previously referenced xScale wins, which are additive to this strong retail performance. Q1 was also an exceptional quarter in terms of cloud on-ramp additions, with 21 new on-ramp wins in the quarter, roughly equivalent to our cumulative volume over the prior four quarters and representing a 75% share of on-ramps launched in our metros.
As a result, Equinix customers can now enjoy low-latency access to multiple clouds in 31 metros across the globe, including eight of the world's top 10 metros by GDP. Expansions this quarter included a Fortune 30 software provider deploying infrastructure to support digital transformation and IT initiatives, and Everest, an Australian cloud services provider specializing in healthcare, expanding to meet country-specific data compliance requirements and improve user experience. Our enterprise vertical continued to be a major contributor to overall booking performance, driven by strength in the retail and financial services sub-segments as enterprises shift from pandemic initiatives such as work from home and collaboration to a broader focus on digital transformation.
Expansions included CME Group, a top global financial derivatives exchange, expanding their footprint to support growing demand of matching engines resulting from a new platform launch, as well as a leading global airline re-architecting to connect to their preferred network and cloud partners and tap into our growing transportation ecosystem. Our channel program continues to deliver exceptional results, contributing more than 30% of our bookings and accounting for over 60% of our new logos. We had great wins with resellers and alliance partners, including AT&T, Dell, and IBM, across a wide range of industry segments focused on digital transformation efforts and COVID-19 response.
Partner wins included working with Verizon, utilizing their network as a service strategy to help a large U.S. healthcare provider modernize their mission-critical contact center and leverage a new cloud architecture supporting 12 million members across the U.S. As well as a win with a global Canadian manufacturer deploying in Canada and Germany for WAN optimization and cloud access utilizing Cisco's SD-WAN solution interconnected to Equinix Fabric. Let me turn the call over to Keith to cover the results for the quarter.
Thanks, Charles. Good afternoon to everyone. On the heels of a record end to 2020, we delivered a great Q1 with strong gross bookings. In fact, our best Q1 ever and our second-best net bookings quarter ever, with solid performance across virtually all of our key metrics. Our platform continues to shine with strong inter and intra-region activity, with a high interest in our expanded product and service capabilities, further separating us from our peers. Interconnection revenues now represent 19% of our recurring revenues, reflecting our continued interconnection momentum. With a great start to 2021 and increased visibility over the rest of the year, we're raising our guidance substantially across revenues, adjusted EBITDA, AFFO, and AFFO per share on a constant currency basis. Let me cover the highlights for the quarter. Note that all growth rates in this section are on a normalized and constant currency basis.
As depicted on slide four, global Q1 revenues were $1.596 billion, up 7% over the same quarter last year, our 73rd quarter of top-line revenue growth due to strong business performance led by the Americas. As expected, non-recurring revenue decreased quarter-over-quarter to 5% of revenues. As noted on our last earnings call, we anticipate a meaningful rebound in Q2 NRR due to forecasted custom installation work across a number of markets, highlighting the inherent lumpiness of this revenue source. Q1 revenues, net of our FX hedges, included a $6 million headwind when compared to our prior guidance rates. Global Q1 adjusted EBITDA was $773 million, or 48% of revenues, up 10% over the same quarter last year, significantly outperforming our expectations due to strong operating performance and lower net utility costs.
Our Q1 adjusted EBITDA performance, net of our FX hedges, included a $3 million FX headwind when compared to our prior guidance rates and $4 million of integration costs. Global Q1 AFFO was $627 million, meaningfully above our expectations due to strong operating performance and lower seasonal recurring capital expenditures. Q1 global MRR churn was 2%, a meaningful step down with lower churn across all three regions. This improved churn is a reflection of our continued disciplined strategy of selling the platform to the right customer with the right application and into the right footprint. For 2021, we continue to expect MRR churn to average between 2% and 2.5% per quarter. Turning to our regional highlights, whose full results are covered on slides five through seven.
APAC, and EMEA were the fastest MRR growing regions on a year-over-year normalized basis at 10% and 9% respectively, followed by the Americas region at 4%. The Americas region saw continued momentum with record price-adjusted gross and net bookings, firm pricing, and a large step-up in cabinets billing. We're seeing good momentum across many markets in the region, with particular strength in Dallas, New York, and the smaller metros of Denver and Mexico City. We have a strong booked but unbilled backlog and continue to expect a large step-up in billing cabinets through the first half of 2021, as partially experienced in Q1 and with more to follow in Q2. Based on this momentum, we expect the Americas' normalized quarterly revenue growth rate for the remainder of the year to be at or near 6% or better.
Also, our power hedging strategy minimized the impact to our business from the utility price spikes in Texas during the extreme weather situation in February. Our power hedging program, along with our world-class operational management, ensured we also protected our customers from these price spikes as well. There is no incremental revenue due to this unexpected weather situation. Separately, our Texas and Oklahoma wind farm settlements trended positively during this quarter. Our EMEA region saw strong bookings in the quarter, including healthy exports and record intra-region activity. Although our FLAP markets remain core to the region's booking engine, we're also seeing increased customer interest in our edge metros, with strong momentum in Dublin, Madrid, and Stockholm, and our new market of Muscat and our soon-to-be-open Bordeaux facility. Revenue growth remains strong, although moderated from previous levels as expected, as we lap past our successful cross-connect repricing initiative.
Interconnection revenue stepped up to 13% of our recurring revenues, showing continued momentum. Finally, the Asia Pacific region had solid net bookings with good pricing and strong enterprise and cloud growth led by our Singapore and Japan businesses. Utilization rates continue to remain high, we've opened capacity in key markets this quarter and will add additional capacity through 2021 to ease potential inventory constraints. Now looking at our capital structure, please refer to slide eight. We ended the quarter with cash of approximately $1.8 billion, an increase over the prior quarter, largely due to our inaugural euro-denominated green bond refinancing, which raised EUR 1.1 billion at a weighted average interest rate of 66 basis points.
As a result, Equinix now has the lowest weighted average cost of debt capital and the longest weighted average maturity of any publicly traded data center company. We also expect to refinance our remaining US dollar high-yield bond over the near term, further driving down our average cost of debt. Our net debt levels remain low relative to our peers at 3.7x our Q1 annualized adjusted EBITDA. We continue to work alongside our credit rating agencies and are pleased to announce that earlier today, S&P upgraded Equinix to BBB flat and widened our leverage tolerance to 5x. We're very appreciative of the continued support we get from S&P, and importantly, we're delighted with this increased financial flexibility. Looking forward, as stated previously, we'll continue to take a balanced approach to funding our growth opportunities while creating long-term value for our shareholders. Turning to slide nine for the quarter.
Capital expenditures were approximately $564 million, including recurring CapEx of $20 million. We opened eight new retail projects this quarter, adding 7,400 cabinets, including a new IBX in Milan. On the xScale side of the business, we opened three new facilities in London, Paris, and Tokyo, adding an initial 28 MW of capacity in our JVs. All this hyperscale capacity has been pre-sold. We also purchased land and buildings for development in Montreal and Mexico City. Revenues from owned assets represent 56% of our total revenues now. Our capital investments deliver strong returns, as showed on slide 10. Our now 154 stabilized assets increase recurring revenues by 5% year-over-year on a constant currency basis. Also consistent with prior years, during Q1, we completed the annual refresh of our IBX categorization exercise. Our stabilized asset count increased by a net seven IBXs.
These stabilized assets are collectively 85% utilized and generate a 27% cash-on-cash return on the gross PP&E invested. Now please refer to slides 11 through 15 for our updated summary of 2021 guidance and bridges. Do note our 2021 guidance does not include any financial results related to the pending GPX India acquisition, which is expected to close in Q2, nor any future capital market activities. For the full year 2021, we're raising our underlying revenues guidance by $40 million and adjusted EBITDA guidance by $33 million, primarily due to strong operating performance and favorable net utility costs. This guidance implies a normalizing constant currency growth rate of 7%-8% year-over-year and an adjusted EBITDA margin of approximately 47%.
Given the operating momentum of the business, we're raising our 2021 AFFO by $26 million to grow between 10% and 12% on a normalized and constant currency basis compared to the previous year. We're also raising our 2021 AFFO per share to range to now grow between 9% and 11% on a normalized and constant currency basis. 2021 CapEx is now expected to range between $2.725 billion and $2.975 billion, including approximately $180 million of recurring CapEx spend, which represents about 3% of revenues. This guidance also includes an incremental $200 million of balance sheet xScale projects, funds that we expect to recover after contributing these investments into our current and our future JVs. Let me stop here. I'll turn the call back to Charles.
Thanks, Keith. In closing, we had a terrific start to the year. As evidenced by our results, the demand backdrop for digital transformation remains strong, and I'm very pleased with our Q1 execution and the continued progress against our key areas of focus. As the world's digital infrastructure company, we are supporting service providers of every size and shape to build out their infrastructure at the digital edge, infrastructure that is more global, more distributed, and more cloud connected than ever before. Together, we're leveraging the power of our platform to cultivate scaled digital ecosystems, enabling our enterprise customers to access all the right places, all the right partners, and all the right possibilities as they transform their businesses and seek to accelerate their digital advantage.
On behalf of the 13,000-plus dedicated members of the Equinix family around the world, I want to say thank you to our 10,000 customers for the trust they place in Equinix. Finally, we look forward to our Analyst Day in June, where we'll continue the discussion of our highly differentiated business model, outline the enormous opportunity ahead, and discuss the actions we are taking and the investments we are making to drive sustained long-term value creation for our investors and our customers. Let me stop there and open it up for questions.
Thank you. We will now begin the question and answer session. If you would like to ask a question please press star one. Our first question today comes from Ari Klein with BMO Capital Markets. Your line is open.
Thank you. Can you talk a little bit about the lower churn in the quarter? What specifically is driving that, and whether or not maybe longer term you see a path to maybe coming down from that 8%-10% range that you typically see?
Sure, Ari. Yeah, obviously, a great quarter on churn. Really, as I said in the script, one of the best we've had in a number of years. Probably a little bit of timing there. We had some pull forward, and we probably pushed a little bit out. I would say that I think that we continue to believe, and as we've talked about this many times, that our best way of managing churn is to continue to be really disciplined in our targeting and our execution of the go-to-market engine. I think that we're seeing that the mix of business continues to be right on the money for what we want. I think we're selling a lot of business into that, the sweet spot of sort of small to mid-size interconnection heavy applications and use cases.
Again, I think that's going to bode well for us over time. I mentioned this in several other forums, which is, we have been the last two quarters up towards the high end of the range, and even slightly over in Q4. Now down right at the bottom of the range, and I think we're really seeing positive trending on the churn. We have efforts underway to really identify all of the, really project out and look at churn risk in the business in a very sophisticated way, identify, get ahead of it, and I think we're seeing real dividends from that.
Got it. Thanks. Just maybe quickly on the new customer additions, it seems like you're a little bit off the recent pace. There's obviously a lot of activity, and you're investing in the go-to-market. Is that an area we should expect to see an uptick over the next few quarters?
I think that our new logo additions continue to be strong. We had good momentum and new logos through the course of 2020. Q1's a little bit of a seasonally soft quarter for new logo additions, typically, but we saw good results. I think enterprise demand continues to be very strong. Our aggregate customer count is not going up as fast as our new logos, due to a variety of factors, including the fact that we're seeing some consolidation activity at the parent account level. We see some other movement in terms of people leaving the system, either due to some smaller customers that might be leaving the system due to financial constraints or other things. I would say overall, we're seeing good, healthy new logo adds. I think we expect to continue to see the new customer count grow.
All right. Thank you.
You bet.
Thank you. The next question comes from Jon Atkin with RBC. Your line is open.
Thanks. Question about slide 19 on xScale, and then slide 23 on kind of the lease renewal. xScale, I'm just wondering, you've outlined stuff that's opened up, stuff that's kind of in the pipeline. Is that the right kind of cadence to think about going forward, or could that potentially accelerate? If you could remind us how that translates into fee income. There's four different ways you get paid, but some of that may be more front-loaded than others before, where you would get the revenue before, or recognize revenues before the customer actually moves in. On slide 23, just on the lease renewals, I'm wondering what would be a realistic remaining pipeline to think about that would enable you to convert leased properties to owned properties, or is it mainly a matter of managing your renewals going forward? Thanks.
Sure. Jon, why don't I start with a little bit of color on xScale at a macro level, and then Keith, if you want to jump in and share a little bit more on the fee streams and their impact and flow through into the business, that'd be great. We'll pick up the second question. Look, we're delighted with, I think, the efforts of Krupal and the whole xScale team and the group of people supporting them from within the core Equinix, as well as the support we're getting from our partner at GIC is, things are really humming in terms of the xScale business. Obviously, we talked about the fact that we've had great pre-leasing activity on the facilities that we put out there.
I think there is an opportunity for us to increase the pace, and we're going to come back to you at the Analyst Day and really talk about what we would see as the scope of opportunity for xScale going forward. As you'll recall, we talked about that in 2018 at the Analyst Day, and I think that we certainly, I've said in a number of other forums that we're trending it more towards the high end of that, and I think we'll give more clarity on what's possible, we think, in the xScale business. We're targeting the pieces of the pie out there that we think are really strategically important and add to the overall platform value. Again, we're seeing really good momentum in the business right now. I do think there's an opportunity for us to continue to pick up the pace.
Keith, why don't you comment on the fee streams and impact into flow-through?
Sure. Jon, as it relates to the fees, there's four fee streams. Two are recurring in nature, and two are non-recurring. The fifth, if you will, stream of value that comes in is below the line through income equity through affiliated entities. Basically, that's our equity ownership in the business. Having said all of that, you are starting to see the momentum pick up. As we announced in our prepared remarks, we introduced three new assets in this quarter, and all of them are pre-sold. It gives you a sense that the momentum is picking up quite substantially with a fairly robust opportunity in front of us. What you're going to start to see in the coming quarters is some non-recurring aspects of the fee income.
You're really going to start to see a ramp-up of the recurring fee stream as well. Again, we'll talk more about it on the June Analyst Day. Suffice it to say, it is exciting to see the momentum coming from that team.
Yeah. Let me just leave it there. I think we answered your question.
Keith, why don't you pick up the lease renewals as well and just what the opportunity might be for us to continue to increase ownership?
Sure. The second one, as you're talking about, Jon, about the leased properties, there's a number of transactions that we are currently in the middle of. We have negotiated the purchase of those acquisitions. It's built into our forward guide. No surprise to you, both as it relates to cash, but also the anticipated consumption of those lease arrangements inside our financials. We are continuing to acquire where we can. There are some that clearly are more important than others. Where we can, we will focus on those that are the most important. Yet at the same time, as we think about our future growth, I think if my memory serves, roughly 75% of all of our future growth right now is on property that is owned or we have a long-term arrangement for a ground lease. It's 75% is going into major metros.
Notwithstanding the fact that we still have over 35 projects underway across the world in many metros in many countries. All that said is you'll start to see that continue to go up. It takes time. I should say we'll announce it when we're closer, but suffice it to say there are some transactions that we are anticipating to announce over the not-too-distant future.
Understood. Just lastly, if I could squeeze this in. The Americas margins came in a lot higher, at least, than we were expecting. Any kind of drivers of that or color you could provide?
I think one of the prepared remarks that I had, first and foremost, the business is performing exceedingly well, the Americas business. One of the things when we report, there's two aspects to it and there's the, if you will, the fundamental business that would compare apple to apple versus the APAC region, the India region. Then there's the corporate overlay. If I tell you more specifically about the Americas region in and of itself, without the corporate overlay, margins are continuing to improve, largely because we have very strong interconnection activity, and we continue to grow our customer base and our scale, and we're driving more profitability into the business. That's the, if you will, the easy response. The second part is that it's just timing of expenses.
As you know, between Q3, Q4, and this quarter, there's been some movement of costs around different quarters. As a result, we start to see the benefit of that movement in Q4. Specifically as it relates to Q1, though, again, one of the comments we made was that we have a very strong utility cost or power hedging program. Our operational team operate our businesses very effectively, the assets, particularly in the Americas, in this particular case, Texas. We have a strong hedging program that protected us against those spikes in price. We also have a wind farm arrangement where both in Texas and in Oklahoma, we have wind farms. We had some benefit attached to that. There's some seasonality around our repairs and maintenance expense.
Overall, you're seeing fundamentally a U.S. business, or Americas business, that is performing exceedingly well and continuing to drive margin into its financials, offset by the corporate investments that we've been making.
Mix of business was really good in the quarter too, in terms of strong MRR performance, which always helps the margin. Yeah, really good quarter. We are continuing to invest. We're being disciplined about the pace of that. Obviously, we're pleased with the margin performance, and we do have an eye on margin expansion as a priority for us over time.
Thanks so much.
Thank you. The next question is from Sami Badri with Credit Suisse. Your line is open.
Hi. Thank you. My first question is to visit back on xScale. I know you guys have laid out quite a bit of information on that recently. The one thing I think that would be very helpful is when we look at the originally published returns that you guys were targeting between 13%-17%, I believe, in the 2018 Analyst Day, did that include all the various forms of income that you're going to be generating from the xScale venture? Is also that the same yield range we should be thinking about for the xScale business?
Keith, do you want to take that bit?
Sure. We're letting Charles direct traffic since we're in two different places, pardon the pause. As it relates to xScale, look, number one, it's going to be very market-dependent, right? Some markets are more competitive than other markets, and you're looking at unlevered anywhere from sort of unlevered returns of 8%-12% at the project level. We get a fee stream on top of that. Of course, we put some debt on the business. As a result, when you look at ultimately Equinix position, our return profile is as good, if not better, than what we've shared. Having said all of that, if you ask me on a specific project, there'll be some variation.
The team under Krupal's leadership are working really well, not only with our construction team, but with our JV partners to make sure that we get the right returns and we're negotiating appropriately with the various hyperscalers to get a good long-term contract. Overall, again, I would just say that there's no material variance from what we said. If anything, it's a little bit better. As Charles made in his prior comments, in fact, there's probably a broader or bigger appetite over the coming quarters and years, given the momentum that we're seeing, that you'll see maybe us do more than we originally anticipated from the June 2018 Analyst Day.
Got it. Thank you. Just one quick follow-up for you, Keith, is, I know the guide does not include any further capital markets activity, and you did mention that you are looking to retire the high-yield debt that you have. Are you going to reissue that as green debt or in another region? Do you have something in mind for when you do revisit that?
Yes. No surprise to you, there'll be an element of green attached to any transaction that we do. We do anticipate that we will retire it over the nearer term, as I said. There's a relatively strong positive impact associated with that. Again, I'll let everybody do the math on what that is. It will be a blend of perhaps five, seven, 10, maybe even the 30-year terms, the extent that we go out that far. Some of it will be green. That tend to be on the shorter end of the curve. The only other thing I would say is to the extent that we can, we will take advantage of the opportunity to make sure that we can retire some of our foreign debt where possible and arbitrage over a favorable sort of interest rate environment.
The last thing I just want to say is, again, we're delighted with the work that our treasury team has been doing under Melanie's leadership to negotiate with S&P and get a favorable upgrade. What was really important here is more financial flexibility. As many of you have asked over both in our private sessions, but also on some of the calls, we've always wanted to have more financial flexibility as it relates to debt. No surprise to everybody, debt's our cheapest source of capital. As a result, you will see us continue to focus on refinancing the debt and then also using debt where appropriate with some balance to equity to make sure that we create this long-term investment portfolio that we've announced.
From our perspective, I just think it was the best of all situations today that not only getting that upgrade, but also having the flexibility to drive down our cost of capital.
Got it. Thank you.
Thank you. The next question comes from Michael Rollins with Citi. Your line is open.
Thanks, good afternoon. First, I was just curious if you can just unpack a little bit more of the organic increase in the annual revenue guidance. I think that was about $40 million. When you consider the size of that change on $6 billion of revenue last year, how does that fit into the organic constant currency revenue growth guidance range of 7%-8% for 2021 that was unchanged from when you provided that in the fourth quarter? Secondly, just to follow up on xScale. It seems that for some of the projects before they enter into the joint venture, you're taking some of this on balance sheet, you're running some of this on balance sheet from just a high-level perspective.
Can you just help frame how we should think about the financial impacts that that's having relative to what's the core operating business and strategy? Thanks.
Sure. Well, Keith, why don't you go ahead and grab the revenue guide, and we can pair up on the xScale follow-up?
Yeah. Michael, I think there's a couple things. One, when we do the charts that we've shared in the earnings deck with everybody, we really try to simplify it. There's two aspects to it. One is how is the underlying business performing, and it's $40 million in uplift. The second part is what currency. Based on the forecast rates that we're using, it's a $61 million downdraft. Frankly, if I took the spot rates from today, which we don't do the day of, we obviously have forecast rates, that $61 million would be cut in half, if not by more, just to give you a perspective. Having said all that, when you look at the fundamental underlying business, it's all about the rounding.
Again, what we've done is we've taken a step up, added $40 million of revenue on a $6 billion business. Now you're starting to see us move up into the range in the 7%-8% range. Before, the bottom end of the range was slightly below 7%. Now you basically you're well into the range on the 7%-8%. Again, this is the first step that we've made since the Q4 earnings call. Again, there's momentum in the business. We're just delighted by the ability to be able to raise $40 million on the underlying business.
Where's that $40 million coming from regionally or activity-wise?
As it relates to sort of our comments around the Americas business, I'm sure it wasn't lost on you. It was very deliberate, our comment that the Americas business for the next three quarters is going to be at or 6%, if not better. It gives you a sense of the Americas business. It had a record, not only a record bookings quarter, certainly on the net basis. The churn is moderate, and as a result, you're getting an Americas business continuing to perform. That's one aspect of it. The other two regions, sort of down the middle, there's some aspect due to our prior pricing uplift in Europe. We're lapping through, if you will, those price increases and some of the accounting adjustments we made last year.
The reality is that overall the business is performing well across our platform, and that's what excites us most. If I was to say one specific thing, it's the Americas business. We're just delighted by the momentum that we're seeing. Charles made the comment in his prepared remarks. There's over 4,000 transactions with over 3,000 customers in the quarter. We're operating at a scale that is just so substantial. By the way, our pipeline is exceedingly strong. It's a combination of all that that has given us the confidence and the visibility to raise our guidance at this juncture, and we still have three quarters to go. By the way, an Analyst Day.
Yeah. On the xScale piece, Mike, yes, we are kind of leaning in and moving projects forward, even in advance of those being into the JV structure because we think the market opportunity kind of is there to grab. As Keith said in the script, that there's a couple $100 million there we would expect to come out of that sort of macro guide he gave overall, which would come in the form of reimbursement once those facilities move into the JV. I would say that our preference obviously is for projects to be into the JV from the beginning. I think we're now at a point where many of the projects we'll be able to do that with.
Especially in markets where we are looking to either form new JVs or due to other circumstances, we are leaning in, taking advantage of the strength of our balance sheet to move those things forward. Looking to get, obviously, those things get reimbursed and come back to us, given that, again, our capital commitment into those projects is basically geared at sort of a 10: 1 ratio, since we're 20% owners, and we expect leverage on those projects.
If I can just add on to what Charles said there. I think the most important part is to recognize, when we do an uplift, like we said in this particular case of our CapEx spend, unfortunately, when you look at our financials, it looks like our CapEx has been elevated. Ultimately, when we get that reimbursement from the joint venture, it comes through a different line. It will be the sale or disposition of that construction in progress into the JV. Basically, it's a gross-up, if you will. That's how it gets represented. Going forward, as Charles said, our objective is to do most of this work inside the JV instead of on our balance sheet.
We're working really hard, and we'll probably spend much more energy talking about this at the Analyst Day because I think there's a really good story around that particular topic.
Thank you.
Thank you. The next question comes from Omotayo Okusanya from Mizuho. Your line is open.
Yes. Good evening. Congrats on the solid quarter. My question has to do more around some of the effects of the FX impact. When I take a look at the new guidance assumptions just around the Singapore dollar or the euro or the pound, it seems like there's an assumption here that the dollar is going to get stronger against those currencies. All year, we've really seen the dollar get weaker. I guess I'm struggling a little bit with why the new FX assumptions are assuming the strength in the dollar, which is kind of causing this FX drag onto kind of an otherwise kind of stellar quarter and outlook.
Sure. Do you want me to take that, Charles, or?
You have it, Keith. Yep, all yours.
Okay. one, thank you for the question and sort of thanks for raising it. I think if you were to step back and say, what is the overall bias to the U.S. dollar? It's for the U.S. dollar to get weaker. That is something that we anticipate. Having said all of that, when we go through our exercise to forecast, and when we forecast a given quarter, we have to look at the prevailing rates irrespective of what they might be in the future. As a company, on the Q4 call, if you recall, there's $106 million, if you will, wind at our back from the weakening of the U.S. dollar versus the basket of currencies that we operate in. This quarter, that actually reversed. When we annualized the impact of that, it was a $61 million headwind.
As I said in one of my other responses, that's based on our forecast rates that we use when we reforecasted the year and we're giving you the guidance. If I use the spot rates of today, basically that $61 million would drop actually by $45 million. It tells you that the U.S. dollar weakened again. Again, we try and bring a lot of discipline to how we message it. It's at the point in time when we do the forecast. We are not projecting forward on what might happen. If it does happen, then you'll see a benefit. You'll see that benefit primarily because roughly 60% of our revenues are earned in currencies other than the U.S. dollar.
When the U.S. dollar weakens, again, recognize we do have some hedges, and they take time to burn off, then you'll see an uplift in revenue accordingly. Hopefully that answers your question. Well, let me stop there and just see if I did answer your question.
Yeah. That's actually very helpful. I kind of understand some of the nuances around that. If you could just indulge me with one more. At the beginning of the year, there was a lot of concern just around extension of sales cycles, whether it was on the xScale side or whether it was on the enterprise side. Can you just talk a little bit about, again, it seems like given your stellar quarter and some of the comments you've made about your verticals, that really isn't a concern anymore. Is that a fair statement?
Yeah. Honestly, we hadn't really experienced that other than, I think, in the very acute periods of COVID where people were trying to just figure out how to make the transition to work from home and really dealing with matters of survival. We did not see any sort of significant extension of the selling cycle. In fact, I would say that I think what we're finding is that we're improving our skillset and capability of delivering the digital transformation-oriented messaging to our enterprise prospects and seeing good momentum in terms of bringing those sales cycles down. We haven't seen that. Hyperscale sales cycles are a little longer, but I wouldn't say they have protracted.
In fact, I think we've made really good progress with several of our key hyperscale customers trying to define more repeatable terms that we can do business under, which is compressing the timeframe in which we can get deals done. That's been an important priority for us and one that we have really put a lot of energy into of late, and it's really important to our partners and customers. I would say no, I feel good about sales cycle right now. In fact, I think when we're looking at our funnel, we are seeing a very deep funnel, and we're feeling like conversion rates and conversion timing support optimism about the remainder of the year, which is all kind of reflected in our guidance.
Thank you very much.
You bet.
Thank you. The next question comes from Colby Synesael from Cowen. Your line is open.
Great. Thank you. A few questions. On 2Q guidance, you mentioned you're using a wider range, just given what could be some, I guess, volatility within the non-recurring portion. I was wondering if you could just give us some sense of what you're thinking NRR might look like, and could we step back up to the levels we saw in the fourth quarter, and is that a better assumption going forward? Secondly, just a point of clarification on your CapEx guidance. You maintained the guidance at $2.125 billion-$2.315 billion for the non-recurring portion, but is that including the $425 million-$475 million for xScale? It felt like you were saying in your prepared remarks that it is included, but the way at least the press release looks like reads, at least reads to me like it's excluded. I just want to get clarification there.
Just real quickly, as it relates to the Analyst Day, obviously xScale is going to be a big focus. It's been a big focus of questions this evening. What is the big focus? Where do you think that investors are maybe a little bit off in terms of their thinking the company and you really want to make sure you're going to be hitting home on? Thank you.
Okay. Keith, why don't you talk about the Q2 revenue range and NRR and then the xScale CapEx, and I'll pick up that last piece on the Analyst Day focus.
Sure. Yeah, Colby, as it relates to the non-recurring, I think what you could see is that meaningfully step up to, if you think about Q4 of 2020, you're starting to get to a percentage of non-recurring revenue that could look something like that. As we said in the prepared remarks, and again, I know you know this quite well, because of some of the work that we're doing, and I made a reference a couple quarters back that there were some large installations that were taking place in the first half of the year. It looks like that those will close and install in Q2. As a result, you'll see a step-up. Again, it'll be more reflective of the % of revenue coming from non-recurring that we saw in Q4.
It would moderate back down higher than Q1, but moderate back down to a more reasonable level for Q3 and Q4. Hopefully, is that helpful?
Yes, that is perfect. Thank you.
Okay.
On the xScale CapEx, Keith.
Yeah. Oh, sorry. Pardon me. As it relates to the xScale CapEx, that is included in the number.
Okay.
Relative to Analyst Day, there'll be a number of things. We will definitely talk about the momentum in the xScale business. It will start flowing through and at least positively impacting the overall business. Since we don't consolidate revenue there, it's not going to be a major driver there other than some very positive flow-through on the fee streams and, of course, the continued strategic importance of that to our platform overall. I think our focus is going to be speaking about the overall opportunity, giving some additional color on our views on the addressable market, and how it's expanding and how our relevance to digital transformation continues to increase in the eyes of our customers. We'll talk about what we're doing to continue to evolve our go-to-market engine to respond to that, including what we're doing on the channel side of things.
We'll also talk about our roadmap for digital services and how we're adding to and scaling capabilities like Network Edge and Equinix Metal, and maybe what we have on the horizon in terms of how those digital services are really going to be responsive to how our customers are thinking about consuming and adapting their digital infrastructure for the world ahead. I think that right now we continue to see great momentum, great response from our customers, and we're eager to share those things coming in June.
Great. Thanks for helping me frame out my preview.
You bet.
Thank you. The next question comes from David Guarino with Green Street. Your line is open.
Hey, thanks. Last quarter, you guys mentioned the development yields for xScale have declined since you initially entered the hyperscale space. Can you maybe talk about what's happened to hyperscale cap rates over that same timeframe and what that might mean for Equinix and their ability to achieve better pricing on JVs than the initial ones that were done with GIC?
Yeah, I would say that we did mention that, and as Keith said, I think that our overall return profile continues to look very attractive in terms of what we think post-fees and post-leverage, the kinds of returns that we're going to be getting on those projects. As he also said, it is a wide range, depending on individual projects and individual market circumstances. I do think there are markets where we've seen that, because I think Keith quoted eight to 12 as the sort of yields that we're looking at in terms of a range, and there are markets that are certainly at the low end of that, where due to a variety of circumstances and just the overall competitive nature of the market. I think we're very pleased with the nature of our relationship with GIC.
We think that we can continue to extend that and have other JVs of similar ilk around the world under very favorable set of terms. We find ourselves to be a very attractive partner based on the engagement that we've had as we've looked at these JVs, we expect we're going to be able to get very favorable terms for those partnerships and have them be very much a win-win. Keith, I don't know if you want to add anything on that last topic relative to the CapEx rates.
No, I think that was reflective in the comments. Again, it'll be specific to the market. Again, we look at it at the project level, and then there's the fee stream for Equinix, and then the leverage that we put on the business. Overall, we're pleased with the business. Again, we're going to spend a lot more energy talking about this in the June Analyst Day. Then we'll be able to break out and give you a little bit more color, I think that will make you probably more satisfied with the overall project, David.
Okay. No, that's helpful. Maybe one more question. We haven't really talked about this topic in a while. Could you share your thoughts on public-to-public M&A for the data center REIT sector, and if Equinix could be a potential player in that?
Sure. I'll comment. Keith, you want to add, feel free. Again, we have always believed, and we've been quite successful using M&A as a tool in terms of thinking about how to expand our business and create value for our customers and for our shareholders. That hasn't changed. We continue to believe that there are opportunities out there. I would say that probably more of them are aligned around in the private markets. We've clearly been active in that regard, filling out our platform geographically and adding key scale and locations in some of our markets around the world. If we felt like there were transactions that we would think were highly strategic and were the right economics in terms of how the deal would flow through on an accretion basis, we're going to be open to those things.
I'd say that it's probably a little biased right now more towards private opportunities or opportunities in the private markets, but we're going to always have our eyes wide open.
Great. Thanks for the time, guys.
You bet.
Thank you. The last question comes from Erik Rasmussen from Stifel. Your line is open.
Yeah, thanks. Maybe just back on xScale. You've really been leaning into that initiative over the past few quarters. Can you just maybe comment on the environment as it relates to the hyperscalers? Is this more concentrated with a few of the leaders, or is it more broad based?
When we formulated the xScale entity and approach, we talked about a range of players there that we would pursue relationships with and pursue business with. It is, to some degree, concentrated. I think that's just the nature of the hyperscale community today is that the largest end of that is taking up more of the overall demand or providing more of the overall demand. It's concentrated at some level. We have had significant success beyond the three or four that would pop to mind for people right off the top of their head. I think we're going to continue to evaluate those opportunities.
I would say that we're really continuing to build on a strong relationship we've had with that full hyperscale community for a very long time because as I talked about when I characterized our hyperscale relationships at the Analyst Day in 2018, they are amongst our largest customers, many of them, and that is a lot of it on the backs of really the important role that we play in terms of their network nodes, their on-ramps, and other elements of their infrastructure outside of availability zones and really large core deployments that might be more of the focus of xScale. It's a very multifaceted relationship that we have with them. They're critical.
We believe that as people adopt hybrid and multi-cloud as the architecture of choice, we think doing that at Equinix is really going to be a key priority for them in terms of both superior economics and performance. The relationships that we have with the hyperscalers are very important to us, and it's certainly to some degree concentrated from a demand basis, but we're continuing to strive to extend that to a larger portfolio of customers.
Great. Maybe just my follow-up. Any change in the competitive environment in Europe around DLR and Interxion a year after that deal has closed, especially as it also appears that investment activity has picked up and demand still seems to be pretty robust there?
Yeah. I would say not really. I think we continue to feel very good about our overall competitive position in Europe. As I said, Interxion has always been a very credible pan-European player there, and I think that continues to be the case. We have what we think is a much stronger global story and have had great success in the market and are going to continue to build on that success, and we feel good about our position there.
Thank you.
Thank you. That concludes our Q1 call. Thank you for joining us.
Thank you. That does conclude today's conference, and thank you for participating. You may disconnect at this time.