What Does Equinix Do? The Interconnection Landlord Model

Equinix rents powered, cooled data-centre space and, on top of that, the network links between its customers. In Q2 2026 it reported $2.625 billion of revenue, about 90% of it recurring, and now plans $5–6 billion of capital spending for 2026. It gets paid by the month, not when a chip ships.

AI DATA CENTERS · Data as at 29 Jul 2026 · Next update: after Equinix's Q3 2026 results
Affects: AI Data Centers · Hyperscalers · Singapore · US

Equinix sits at the landlord-and-switchboard end of the AI Data Centers layer: it owns buildings and charges for space, power and connections. It does not rent chips like a neocloud, and it does not run the AI service itself. Start with What Is an AI Data Center? for the layer, then read its listed peers Digital Realty and Keppel DC REIT.

In short: Equinix earns rent on space and power (colocation), fees on the cables between customers (interconnection), and one-off fees on its xScale hyperscale business. In Q2 2026, revenue was $2.625bn (+16%), recurring revenue was $2.377bn, and adjusted EBITDA was $1.396bn, a 53% margin. The model works while rent and connections keep compounding faster than the cost of the halls it must build first.

Education only, not advice to buy or sell any security. Figures are from Equinix's Q2 2026 results release, dated as shown.

Numbers that matter

Q2 2026 revenue

$2.625bn

+16% on Q2 2025; one-time xScale fees helped · 29 Jul 2026

Paid

Recurring share of revenue

90%

$2.377bn of $2.625bn is recurring (our arithmetic) · Q2 2026

Recurring

Colocation + interconnection

$1.772bn + $0.453bn

Rent for space and power, plus fees for connections · Q2 2026

Two seats

Adjusted EBITDA margin

53%

$1.396bn; Equinix calls it a record margin · Q2 2026

Paid

2026 capital spending plan

$5–6bn

Total capex guide for the full year · 29 Jul 2026

Spend

Net interconnections added

9,700

A record for one quarter · Q2 2026

Sticky

Status chips are Second Order's read. Equinix did not disclose the size of the one-time xScale fees, so we do not guess it.

What does Equinix actually do?

Three jobs, in order.

Host. Connect. Build with partners.

1. It hosts. Customers rent racks and cages inside Equinix buildings, and Equinix supplies the power, cooling and security. That is colocation. It was $1.772bn of Q2 revenue, 67.5% of the total (1,772 ÷ 2,625).
2. It connects. Customers inside the same building pay to link directly to each other, to networks and to clouds. That is interconnection. It was $453m, 17.3% of Q2 revenue, and Equinix added a record 9,700 net new connections in the quarter.
3. It builds with partners. The release refers to xScale, Equinix's hyperscale offer, which it invests in through joint ventures. Capex guidance excludes investments in those joint ventures, and Q2 revenue and profit were helped by one-time xScale fees.

The mix matters for AI. AI customers need somewhere to put their machines and a fast way to reach their data and clouds. Equinix said in Q2 that it widened its work with Cisco and NVIDIA on standard AI-factory designs inside its buildings. It rents the place and the connections. It does not own the chips.

Footprint, by region, for Q2 revenue: Americas $1,251m (48%), EMEA $845m (32%) and Asia-Pacific $529m (20%). Asia-Pacific includes Singapore, where the government decides how many new megawatts each operator gets. See our Singapore note.

How does Equinix make money?

It gets paid every month for space and links, and now and then for one-off work. Four lines in the Q2 table matter:

• Colocation — monthly rent for space and power; $1,772m in Q2, up from $1,585m a year earlier.
• Interconnection — monthly fees per connection; $453m, up from $407m a year earlier.
• Managed infrastructure — services on top of the space; $112m, smaller than a year ago ($117m).
• Non-recurring revenue — installation and one-off fees, including xScale; $248m, against $113m in Q1.

Our arithmetic. Recurring revenue was $2,377m of $2,625m, which is 90.5%. A year earlier it was $2,143m, so recurring revenue grew 10.9% (2,377 ÷ 2,143 = 1.109). That matches the 11% monthly-recurring-revenue growth Equinix reports. The headline 16% is bigger because non-recurring revenue jumped from $113m in Q1 to $248m in Q2, a rise of $135m. Total revenue rose $181m over Q1 (2,625 − 2,444), so about three-quarters of that step-up was non-recurring (135 ÷ 181 = 0.75). The release ties the jump to one-time xScale fees but does not give their amount.

Capex is the other number to hold next to it. Equinix guides $5.0–6.0bn of total capital spending for 2026 and $5.21–5.27bn of adjusted EBITDA. On those ranges, capex is roughly 0.95 to 1.15 times EBITDA (5.0 ÷ 5.27 and 6.0 ÷ 5.21). Total debt principal outstanding was $22.2bn at 30 June 2026, and Q2 interest expense was $151m.

Who gets paid. Equinix first, through rent that renews. Construction and equipment firms are paid as the 52 projects it has underway (across 33 markets) are built. Lenders are paid interest on $22.2bn of debt. Who pays. Enterprises, networks, clouds and AI customers. Money sticks in monthly rent and connection fees, not in one-off fees.

What limits it?

Halls first. Fill second. Quality of growth third.

1. A hall has to be built before it bills. Equinix said nine new projects were added since April, taking the list to 52 projects across 33 markets. A $5–6bn year of spending only pays back as those halls fill with customers.
2. One-off fees flatter a quarter. The 16% revenue growth includes one-time xScale fees. The cleaner read is the 11% recurring growth, which Equinix says it has now delivered for three straight quarters.
3. Local power and community terms are part of the job. In Q2 Equinix published U.S. community principles and signed the Ratepayer Protection Pledge. Our read: building a hall now comes with promises about who pays for the grid, not just a permit.

The honest uncertainty is fill. The Q2 release does not give megawatts, utilisation or lease lengths, so we cannot work out how full the halls are or how long customers are locked in. We do not estimate them.

Who else does this?

Roles, not a league table.

What separates them is who owns the land and the building, how many customers share one site, and how long the leases run. Equinix leans on many customers sharing a building and paying for connections. Applied Digital leans on a few very large tenants on long leases. The first earns more from crowds. The second earns more from scale and has more to build first.

What would change this view?

The read on the model weakens if:

• Recurring revenue growth falls clearly below the recent 11% pace, while capex stays at $5–6bn.
• A later release strips out the one-time xScale fees and shows underlying growth well under the 16% headline.
• Bookings slow while the 52-project list keeps finishing: Q2 annualised gross bookings were $424m, up 23%, and the halls need that pace to fill.
• Grid or community terms in a big market delay new halls for long enough that capex runs ahead of revenue.

It stays intact while monthly recurring revenue keeps growing at double digits, interconnections keep rising, and each new hall fills on a visible clock.

Practical takeaways

• Equinix's model is Host → Connect → Build with partners: rent for space and power, fees for connections, and one-off xScale fees on top.
• Q2 2026 (29 Jul): revenue $2.625bn (+16%), recurring $2.377bn (+11%), adjusted EBITDA $1.396bn at a 53% margin.
• Our arithmetic: about 90% of revenue is recurring, and about three-quarters of the rise over Q1 was non-recurring.
• 2026 plan: $5.0–6.0bn of capital spending against $5.21–5.27bn of adjusted EBITDA guidance.
• The stuck step is filling new halls on schedule, not announcing more of them.

FAQ

What does Equinix do?
Equinix owns data centres and rents out the space, power and cooling inside them, plus the network connections between its customers. It earns most of its revenue as monthly rent and monthly connection fees.

How does Equinix make money?
Mostly from colocation (rent for space and power) and interconnection (fees for direct links between customers). In Q2 2026 those two lines were $1.772bn and $453m of $2.625bn in revenue. A smaller part comes from managed services and one-off fees.

What is xScale?
xScale is how Equinix builds large halls for the biggest cloud customers. The Q2 2026 release refers to xScale joint ventures and to one-time xScale fees that lifted revenue. It did not disclose the fee amount.

Is Equinix an AI company?
Not in the sense of making chips or models. It rents the space, power and connections where AI customers place their equipment. In Q2 2026 it said it expanded its work with Cisco and NVIDIA on standard AI-factory designs.

How is Equinix different from Digital Realty?
Both rent data-centre space. Equinix's largest lines are colocation and interconnection, together about 85% of Q2 revenue (2,225 ÷ 2,625). Digital Realty also signs very large hyperscale leases, including two worth $410m of annual rent at 100% share in July 2026.

Is Equinix a good investment?
We do not make buy or sell calls, and nothing here is a recommendation. What we can tell you is what Equinix does, how it gets paid, and which numbers would change the picture. The decision is yours.

Keep reading on the map

• The layer: AI Data Centers
• The term: What Is an AI Data Center?
• Peers: What Does Digital Realty Do? · What Does Keppel DC REIT Do? · What Does NEXTDC Do?
• A build-first campus: What Does Applied Digital Do?
• Where it happens: Singapore · the US

The members cut on a stuck step is already live: When utilities bill data centers before power, where does cash stick?. This page stays the free Stack read of the Equinix model.

Sean

Writes Second Order by TKN — a plain-English map of AI infrastructure. Who gets paid, where money sticks, which step is stuck. Not investment advice.

Author page → · Editorial standards →

How we check this

Figures come from Equinix's Q2 2026 results release, filed with the U.S. SEC on 29 July 2026, and from the peer releases listed below, each dated. Where we work something out ourselves, the arithmetic is shown in full. The release gives no megawatts, utilisation or lease lengths, so we do not estimate them.

Last reviewed: 11 Oct 2026 · Next review: after Equinix's Q3 2026 results
Spot an error? Tell us and we will correct it and note the change here.
Our editorial standards →

References

1. Equinix, Equinix Reports Second-Quarter Results, Raises 2026 Guidance and Long-Term Outlook (company, SEC exhibit 99.1), 29 Jul 2026 — revenue by line and region, adjusted EBITDA, debt, 2026 guidance, 2027–2029 outlook
2. Digital Realty, Second Quarter 2026 Financial Supplement and earnings release (company, SEC exhibit 99.1), 23 Jul 2026 — bookings, backlog, 310 data centres, 2,799 MW occupied of 3,102 MW, Northern Virginia stake, debt
3. Keppel DC REIT, Unaudited results for the first half year ended 30 June 2026 (media release) (company, SGX filing), 23 Jul 2026 — distributable income, DPU, occupancy, WALE, leverage, cost of debt
4. NEXTDC, FY26 Record Results and Record FY27 Growth Guidance (ASX release) (company, ASX filing), 27 Aug 2026 — contracted and billing MW, forward order book, FY27 guidance, capex, liquidity, power position
5. Applied Digital, Applied Digital Reports Fiscal First Quarter 2027 Results (company), 7 Oct 2026 — 1.41 GW leased, 250 MW live, about $36bn contracted, HPC and hosting revenue, debt and cash