Data Centers – CAPRE Ashburn Colocation Adoption Accelerating DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. 10 September 2019 Sami Badri Communications Equipment & Infrastructure Research Tel: + 1 (212) 538-1727 ahmedsami.badri@credit-suisse.com Equity Research Americas Table of Contents & Critical Sector Questions Sami Badri | 212-538-1727 | ahmedsami.badri@credit-suisse.com I.Introduction – Industry & Analyst Coverage II. Critical Question #1: What is the DC industry’s strength currently? III. Credit Suisse CIO July 2019 Survey Results IV. Critical Question #2: Where are DC Valuations? V. Critical Question #3: Why is colocation adoption accelerating now? VI. Concluding Highlights VII.Appendix Source: Credit Suisse Research 2019 2 Introduction – Credit Suisse Research Coverage Model Sami Badri | 212-538-1727 | ahmedsami.badri@credit-suisse.com Companies Covered Research Core Focus Coverage Model Structured to Capture Entire Technology Sector Trends with Streamlined IT, Cloud, & Telecom Spending, with deep industry insight. Source: Credit Suisse Research. Responsibilities and Process Include: 1)Core Objective: Conduct research on the broader technology and data center sectors using industry data, proprietary data, and financial models to make rating and valuation decisions for investors. 2)Process: Includes heavy ingestion of industry data points from all adjacent industries (including real estate, industrials, utilities, broader tech.). 3)Clients: Asset Managers, Private Equity, Venture Capital, Sovereign Wealth, Pension, and Hedge Funds seeking to deploy/invest capital. 1)Ultimately: Trying to value publicly traded companies such as Equinix, Digital Realty, Cisco, Arista Networks, etc., precisely. 2019 3 Critical Question #1: How would you assess the data center industry’s strength as of 2Q’19? Source: Credit Suisse Research Sami Badri | 212-538-1727 | ahmedsami.badri@credit-suisse.com 2019 4 Assessing Industry Strength Key Industry and MTDC indicators: 1) Hyperscale Capex Trajectory (Industry Data) 2) MTDC Construction Trajectory (Industry Data) 3) Cloud On-Ramp Trajectory (Industry Data) 4) MTDC Revenue Growth 5) MTDC 2Q’19 Utilization, ARPU, and Leasing Backlog 6) MTDC Interconnection Growth Source: Credit Suisse Research. Sami Badri | 212-538-1727 | ahmedsami.badri@credit-suisse.com 2019 5 Hyperscale CapexCAGR($ millions)201720182019E2020E2021E2022E13-'1818-'22Alphabet13,184 25,139 24,472 25,043 25,989 27,015 27.9%1.8%Microso...
