Now, with the business, we’ve been saying this for the last few quarters, and I’m sure it’s not lost on everybody. The operating performance of our business, and that’s what the primary, that is not the — that is the sole makeup of our dividend. We’re returning capital through strong operational performance and that — the taxable operational performance of the business, which, of course, mimics the book operational performance has been accelerating. And over the years, and certainly lately, we’ve been doing all we can to, if you will, to mitigate a point of time where we’ve under distributed. But we’re at a point now where we can’t hold back that momentum any longer. And as a result, we want to give our tax teams the flexibility to manage the tax provisions and tax positions this year instead of having to worry about what we file in September of next year for 2023.
So, we accelerated the decision. But — so that’s sort of why we did it in Q4 and then just the sheer size of the investment or the distribution is to give you a sense of the momentum in the business and how much the taxable income is growing relative to the business. And so we needed to release that and create capacity for ourselves, not just for this quarter and closing out the 2023 year, but certainly for 2024 as well. As we look forward, we have pretty darn good visibility on what we think that taxable income is going to look like. And so we wanted to mitigate basically an under disputed issue in 2024, and we just — we solved the problem by making this decision.
Michael Rollins: Thanks. And then just on one other thing that you mentioned earlier. You mentioned the opportunity to try to improve the power density in the existing footprint. And just curious if you could share with us how the power utilization of your portfolio compares to the cabinet utilization of your portfolio? And the opportunity based on access to the utility load and thinking about the cost, like how much further can you take the power in the existing portfolio? Thanks.
Charles Meyers: Yes. Great question, Mike. It’s unfortunately not a particularly simple matter. But I will give you an answer to your question, which is our power utilization is actually meaningfully lower than our cabinet utilization, right? And so that does represent, I think, some opportunity for us if we — to the extent that we can match space and power and have the appropriate cooling requirements to unlock productive value creation capacity from the platform. Again, it’s not super straightforward because you have to ensure that you can — you have the — draw can be very different facility to facility. And your ability to augment available power is very substantially either due to availability of power from the utility or from our own ability to do that in terms of the equipment available to power distribution in the facility, et cetera.
And so I do think that there is opportunity there to be had. And I think it is something that is working to our advantage in terms of the kind of overall dynamics of the business now, but one where we always have to continue to ensure that we are delivering superior reliability to our customers, understand exactly what their requirements are, can cool that — can cool it properly, deliver the reliability and resiliency they need and sort of manage all those factors simultaneously. So, I do think, though, that you are — I think you’re properly interpreting an opportunity there that says, okay, well, then if you’re churning cabinets out at lower, selling them at higher and you have some sort of headroom from a power perspective and you’re freeing up space or cabinet capacity, can you take action to sort of augment power over time in ways that would allow you to create value.
I think the answer is yes, and we’ll be hard at work figuring out how to do that best.
Keith Taylor: Mike, maybe I can just add on 1 other thing to what Charles has said. One of the main objectives coming from Ralph’s organization is to drive efficiency into the IBXs. So, we’re perpetually looking for ways to drive more efficiency and create the capacity — incremental capacity that Charles refers to. We’re also looking at new design and construction techniques to run them more efficiently. And that drives down our PUE and PUE is good for the customer. In some cases, we’re held to certain PUE with our customers. And so it drives the efficiency into the business and create that capacity that hopefully we can resell. But these investments, particularly with some of the older data centers to the extent a new technology or certain components of our MCE become available, and we choose to make an investment.
You’re not expanding as necessarily the footprint but you’re making an investment that frees up stranded capacity or energy, that works really well for the business and as I said, for the customer.
Charles Meyers: Yes. And one last comment I’d make, Mike, is that I do think this highlights what a very different business we have. Because when you’re talking about a very large number of customers in a facility, that’s extremely different. So, we wouldn’t have that same view relative to an xScale facility, for example, right? I mean that you design it as a certain power capacity, you sell that to a customer, sometimes an entire building to a customer at that and sort of that is what it is. One or two customers sort of it doesn’t matter. But when you’re talking about very large numbers of customers with very widely ranging power requirements, it represents both a challenge and an opportunity and 1 that I think, over time, we’ve developed a set of processes and capabilities to manage quite effectively.
Michael Rollins: Thanks.
Operator: Our next caller is Eric Luebchow with Wells Fargo. You may go ahead.
Eric Luebchow: Appreciate it. Thanks for the question. So, maybe you could touch a little bit, Charles, on the kind of the enterprise sales in the quarter in the pipeline? I know with rates moving higher recently and some concerns around potential recession in the US. Are you seeing any of them pulling back an IT spend to being more cautious in their outlook as they look kind of at their IT stack and hybrid cloud migration and any signs that they’re kind of optimizing costs that are evident in any of your churn numbers?
Charles Meyers: Yes. Yes. Great question, Eric. As we said in the script, you heard me say that it was an environment that we — I thought was characterized by customer caution. And I think that’s true. And so I — as I — and I’ve been out as I very much like to be out in the field with our teams, both in the data centers, in the sales offices, with customers, with partners, et cetera. And I think I would say that there is a sentiment that says, hey, customers are very forward leaning from the standpoint of recognizing they need to invest in digital and digital transformation and AI, although I think they’re very early in those endeavors in many cases. But they also are facing the natural constraints that are created in a more challenging macro environment from a budgetary standpoint.
