Change atop Equinix’s Nascent Hyperscale Data Center Business

Jim Smith has stepped down from xScale leadership role, replaced by finance exec Krupal Raval.

Yevgeniy Sverdlik

July 30, 2020

2 Min Read
New data hall being commissioned inside Equinix's PA8 data center in Pantin (outside Paris) in February 2019
New data hall being commissioned inside Equinix's PA8 data center in Pantin (outside Paris) in February 2019JACQUES DEMARTHON/AFP via Getty Images

Jim Smith, who headed Equinix’s relatively recent foray into leasing large chunks of data center capacity to about a dozen largest cloud platforms, has stepped down from the role. He’s replaced by Krupal Raval, who for the last year or so served as the xScale unit’s VP of finance.

Equinix CEO Charles Meyers revealed the leadership change on the company’s second-quarter earnings call Wednesday but stopped short of providing the reason behind it.

“Jim Smith has made the decision to step down from his role as managing director of the [xScale] program but does remain as an advisor to the initiative,” Meyers said.

The two-year-old program is an attempt by Equinix, which gets most of its revenue from high-margin retail colocation and interconnection services, to benefit more from the recent years’ boom in the wholesale data center space, driven by record expansion by the hyperscale platforms.

Because it’s a capital-intensive, low-margin business, Equinix has formed joint ventures with investors to fund its xScale projects, making money partially from returns on its portion of the capital investment and partially by charging the JV for managing, operating, and leasing the facilities.

Both Smith and Raval used to work at Digital Realty, the world’s second-largest data center provider and Equinix’s biggest rival. Smith was Digital’s CTO and senior VP of portfolio operations before leaving the company in 2015. Raval, most recently, was CFO for Asia-Pacific, until leaving in 2016 to join Smith’s hyperscale team at Equinix.

Related:US Data Center Operators Have Financing Advantages Over EU Counterparts

Equinix reported $1.47 billion in revenue for the second quarter, up six percent from last year, and net income of $133 million.

Similar to first quarter, the company didn’t feel substantial negative business impact from the COVID-19 pandemic, its executives said. Only 3 percent of its revenue comes from companies in the industries most impacted by the pandemic, which according to Equinix are travel, energy, and retail.

On the earnings call, Meyers and Equinix CFO Keith Taylor maintained that the xScale program continues to go well. The first two xScale facilities, in Europe, were just recently completed, Taylor said.

During the second quarter, a single hyperscaler pre-leased the entire Paris 9 data center that’s still under construction, they said. Equinix will likely make the asset part of xScale “very soon,” Meyers said.

“And we continue to see good customer interest in pipeline on the other facilities,” he added.

Its European $1 billion xScale joint venture is with GIC, Singapore’s state-owned investment fund. Equinix and GIC have also agreed to launch a similar venture in Japan, an underserved cloud market where Chinese and American cloud giants are rushing to expand. The Japan JV deal is on track to close by the end of the year, the executives said.

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