Digital Realty Q3 2025 slides: AI demand drives guidance boost and record bookings

Introduction & Market Context

Digital Realty Trust Inc. (NYSE:DLR) presented its third quarter 2025 financial results on October 23, showcasing strong performance driven by artificial intelligence workloads and digital transformation initiatives. Despite missing EPS expectations with $0.15 against a forecast of $0.31, the company exceeded revenue projections, reporting $1.6 billion versus the anticipated $1.53 billion.

The data center REIT’s stock responded positively to the results, rising 1.73% in after-hours trading to $172.80, reflecting investor confidence in the company’s strategic positioning and growth trajectory in the expanding AI infrastructure market.

Quarterly Performance Highlights

Digital Realty reported total bookings of $201 million at 100% share, with data center revenue growing 9% year-over-year. Core Funds From Operations (Core FFO) per share reached $1.89, representing a 13% increase compared to the same period last year.

The company demonstrated strong customer acquisition, adding 156 new logos during the quarter while maintaining a low churn rate of 1.6%. Notably, the 0-1MW and interconnection segment delivered $85 million in bookings, accounting for 52% of total quarterly bookings.

As shown in the following chart detailing historical bookings performance:

Renewal pricing showed significant strength, particularly in the >1MW category, where cash rental rate changes reached 19.9% and GAAP rental rate changes hit 35.8%. The smaller 0-1MW segment maintained solid performance with 4.2% cash rental rate increases. These renewal spreads, representing $192 million of annualized rental revenue, demonstrate Digital Realty’s pricing power in a tight data center market.

Strategic Initiatives & AI Focus

Digital Realty is strategically positioning itself to capitalize on the growing demand for AI infrastructure. The company currently maintains approximately 2,890 MW of in-place IT capacity with an additional 730 MW under construction. During Q3, the company delivered 51 MW of new capacity while initiating 50 MW of new construction.

The company’s development pipeline for AI workloads is substantial, as illustrated in this capacity breakdown:

To accelerate innovation in the AI space, Digital Realty launched its Innovation Lab and formed strategic partnerships with technology leaders including AMD, Cisco, Dell, and DXC. The company also established the first Quantum-AI Data Center in New York City in partnership with Oxford Quantum Circuits, positioning itself at the intersection of quantum computing and artificial intelligence.

CEO Andy Power emphasized the unprecedented demand environment, stating, "Demand has never been stronger," and noting that the company is "not even scratching the surface of what we can do with this technology."

Financial Guidance & Outlook

In a significant vote of confidence, Digital Realty raised its full-year 2025 financial guidance across multiple metrics. The company now expects:

Total revenue is projected to reach $6,025-$6,075 million, up from the previous guidance of $5,800-$5,900 million. Adjusted EBITDA expectations were raised to $3,300-$3,350 million, while Core FFO per share guidance increased to $7.32-$7.38 from the previous $7.00-$7.10 range.

The company is also experiencing currency tailwinds, with a 2% per share benefit in Q3 from favorable foreign exchange movements. Digital Realty’s revenue exposure is diversified across multiple currencies, with 50% in USD, 23% in Euro, and the remainder spread across various global currencies.

Competitive Industry Position

Digital Realty continues to strengthen its global footprint, maintaining a presence in over 50 metropolitan areas with more than 300 data centers serving over 5,000 customers. The company’s interconnection business remains robust with over 231,000 cross-connects.

The company’s strategic priorities focus on three key areas, as outlined in this overview:

Digital Realty’s sustainability initiatives further differentiate it from competitors. The company sources 75% of its energy from renewable sources globally, with 185 sites matched with 100% renewable energy. It also maintains 1.3 GW-IT of green building certified capacity and leads the industry in green bonds with $7.2 billion in aggregate principal amount issued.

Forward-Looking Statements

Looking ahead, Digital Realty is well-positioned to capitalize on continued AI-driven demand. The company maintains a substantial backlog representing over 20% of in-place annualized rent, with 85% expected to commence through 2026.

This multi-year backlog provides enhanced visibility into future revenue growth:

From a capital perspective, Digital Realty has secured over $15 billion in joint venture and fund capital available for hyperscale data center development. The company’s debt profile remains strong with 96% unsecured debt, 91% fixed-rate, and a well-laddered maturity schedule that limits near-term refinancing risk.

As Digital Realty targets 10% top-line growth in 2026, the company’s strategic focus on AI infrastructure, enterprise solutions, and global expansion positions it to capitalize on the ongoing digital transformation across industries, despite potential challenges from power availability constraints and increasing competition in the AI data center market.

Full presentation:

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