EQUINIX INC (EQIX)

CIK: 0001101239. SIC: 6798 Real Estate Investment Trusts. Latest 10-K as of: 2026-02-11.

SIC breadcrumb: Finance, Insurance, And Real Estate > Holding And Other Investment Offices > SIC 6798 Real Estate Investment Trusts

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1101239. Latest filing source: 0001101239-26-000032.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001101239.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-11. Report date: 2025-12-31.

ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following commentary should be read in conjunction with the financial statements and related notes contained elsewhere in this Annual Report on Form 10-K. The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words "believes," "anticipates," "plans," "expects," "intends" and similar expressions are intended to identify forward-looking statements. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a discrepancy include, but are not limited to, those discussed in "Liquidity and Capital Resources" and "Risk Factors" elsewhere in this Annual Report on Form 10-K. All forward-looking statements in this document are based on information available to us as of the date hereof and we assume no obligation to update any such forward-looking statements.

Item 7 of this Form 10-K focuses on discussion of 2025 and 2024 items as well as 2025 results as compared to 2024 results. For the discussion of 2023 items and 2024 results as compared to 2023 results, please refer to Item 7 of our 2024 Form 10-K as filed with the SEC on February 12, 2025.

Our management's discussion and analysis of financial condition and results of operations is intended to assist readers in understanding our financial information from our management's perspective and is presented as follows:

•Overview

•Results of Operations

•Non-GAAP Financial Measures

•Liquidity and Capital Resources

•Critical Accounting Estimates

•Recent Accounting Pronouncements

Overview

We provide a global, vendor-neutral data center, interconnection and edge solutions platform with offerings that enable our customers to reach everywhere, interconnect everyone and integrate everything. We connect economies, countries, enterprises and communities, delivering seamless digital experiences and cutting-edge AI— quickly, efficiently and with high service reliability.

Global enterprises, service providers and business ecosystems of industry partners rely on our IBX data centers and expertise around the world for the safe housing of their critical IT equipment and to protect and connect the

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world's most valued information assets. They also look to Equinix for the ability to directly and securely interconnect to the networks, clouds and content that enable today's information-driven global digital economy. Our recent IBX data center openings and acquisitions, as well as xScaleTM data center investments, have expanded our total global footprint to 280 data centers, including 23 xScale data centers and the MC1 and SN1 data centers that are held in unconsolidated joint ventures, across 77 markets around the world. We offer the following solutions:

•premium data center colocation;

•physical and virtual interconnection and data exchange solutions;

•edge solutions for deploying networking, security and hardware; and

•remote expert support and professional services.

Our data centers around the world allow our customers to bring together and interconnect the infrastructure they need to seamlessly operate their business. With Equinix, they can scale with speed and agility, accelerate the launch of new digital offerings while safeguarding data, and implement AI applications at scale to achieve business success. We enable customers to simplify their digital infrastructure, ensure interoperability across platforms, and maximize speed, efficiency and security to deliver superior customer, partner and employee experiences. The Equinix global platform, and the quality of our offerings, have enabled us to establish a critical mass of customers. As more customers choose Equinix for high connectivity and performance reliability at the metro edge, it benefits their suppliers and business partners to colocate in the same data centers and connect directly with each other. This adjacency creates a network effect that attracts new customers while continuously enhancing our value proposition to existing customers and enabling them to capture further economic and performance benefits from our offerings.

In 2025, we opened 16 new data centers, including new sites added via our joint ventures and acquisitions. These openings included sites in the following metros: Chennai, Chicago, Dublin, Frankfurt, Jakarta, Lisbon, Madrid, Manila, Monterrey, Mumbai, Salalah, São Paulo and Washington, D.C. This resulted in an increase in our total number of data center facilities to 280. Additional 2025 highlights include:

•We had 52 active major development projects underway as of January 2026 across 35 metros around the world. We anticipate these development projects will deliver 55,000+ cabinets of retail capacity and 100+ MW of xScale capacity through 2028.

•We surpassed 500,000 interconnections, further demonstrating our market-leading position as we enable our customers to meet their real-time operational demands and networking requirements.

•We closed strategic land acquisitions in several locations, including the greater Amsterdam, Chicago, London, Milan, Mumbai and Toronto metros, which will support approximately 1 GW of retail and xScale capacity.

•We completed our acquisition of all outstanding shares of TIM NextGen DC Corporation, consisting of three data centers in the Philippines, for total purchase consideration of $183 million. This marked our entry into the Philippines market. See Note 3 within the Consolidated Financial Statements.

•We raised $4.4 billion of capital to support organic growth, land and building acquisitions and required debt refinancings. This included the following:

◦Throughout 2025, we issued $4.3 billion of senior notes due between 2029 and 2034. The issuances were denominated in euros, U.S. dollars, Singapore dollars and Canadian dollars and were translated at the exchange rates in effect on issuance. See Note 10 within the Consolidated Financial Statements.

◦In February and March, we sold 107,493 shares on a spot basis under the 2024 ATM Program for approximately $99 million, net of commissions and other offering expenses. See Note 11 within the Consolidated Financial Statements.

Annualized Gross Bookings:

In 2025, we publicly disclosed our Annualized Gross Bookings metric. Annualized Gross Bookings represents the annualized revenue impact of stated monthly recurring revenues ("MRR") on newly executed contracts with a term of 12 months or more, net of any MRR decreases from cancellations or terminations associated with the new contracts and adjusted for the impact of pricing changes on existing contracts. This measure excludes contracts for recurring revenue from our joint ventures and the impact of power price adjustments. This measure only includes contracts that we anticipate will start generating revenue within 90 days. During the year ended December 31, 2025, we had total Annualized Gross Bookings of $1.6 billion, up 27% from 2024. This growth reflects the overall momentum in customer demand and our ability to capture that demand across our global platform.

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Capacity Trends:

Our cabinet utilization rate represents the percentage of cabinet space billed versus total cabinet capacity, which is used to measure how efficiently we are managing our cabinet capacity. Our cabinet utilization rate varies from market to market among our IBX data centers across our Americas, EMEA and Asia-Pacific regions. Our cabinet utilization rates were approximately 77% and 78%, as of December 31, 2025 and 2024, respectively. We continue to monitor the available capacity in each of our selected markets. To the extent we have limited capacity available in a given market, it may limit our ability for growth in that market. We perform demand studies on an ongoing basis to determine if future expansion is warranted in a market. In addition, power and cooling requirements for most customers are growing on a per unit basis. As a result, customers are consuming an increasing amount of power per cabinet. Although we generally do not control the amount of power our customers draw from installed circuits, we have negotiated power consumption limitations with certain high power-demand customers. This increased power consumption, which we expect to accelerate with the adoption of AI, has driven us to build out our new IBX data centers to support power and cooling needs twice that of previous IBX data centers. We could face power limitations in our existing IBX data centers, even though we may have additional physical cabinet capacity available within a specific IBX data center, and in our ability to expand our footprint in existing and new markets. Additionally, global supply chain challenges could result in a lack of availability or delays in the delivery of data center equipment. These challenges have driven us to invest in and commit to future purchases in advance of our standard practice to mitigate risks associated with these supply chain issues. These constraints could have a negative impact on our ability to grow revenues, affecting our financial performance, results of operations and cash flows and the growth opportunities presented by the adoption of new technologies, including AI.

Expansion Opportunities:

To serve the needs of the growing hyperscale data center market, including the world's largest cloud service providers and increased demand driven in part by the adoption of AI, we continue to look at attractive opportunities to grow our market share and selectively improve our footprint and offerings. As was the case with our recent expansions and acquisitions, our expansion criteria will be dependent on a number of factors, including but not limited to demand from new and existing customers, power availability and capacity, quality of the design, access to networks, clouds and software partners, capacity availability in the current market location, amount of incremental investment required by us in the targeted property, automation capabilities, developer talent pool, lead-time to break even on a free cash flow basis and in-place customers. Like our recent expansions and acquisitions, the right combination of these factors may be attractive to us. In addition, to serve the growing hyperscale requirements, we have entered into joint venture partnership arrangements across our Americas, EMEA and Asia-Pacific regions to develop and operate xScale data centers. Depending on the circumstances, these transactions may require additional capital expenditures funded by upfront cash payments or through long-term financing arrangements in order to bring these properties up to our standards. Property expansion may be in the form of purchases of real property, long-term leasing arrangements or acquisitions. Future purchases, construction or acquisitions may be completed by us or with partners or potential customers to minimize the outlay of cash, which can be significant.

Revenue:

Our business is primarily based on a recurring revenue model comprised of colocation, interconnection and managed infrastructure offerings. We consider these offerings recurring because our customers are generally billed

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on a fixed and recurring basis each month for the duration of their contract, which is generally one to five years in length, and thereafter automatically renews in one-year increments. Our recurring revenues have comprised more than 90% of our total revenues during the past three years. In addition, during the past three years, more than 90% of our monthly recurring revenue bookings came from existing customers, contributing to our revenue growth. Our largest customer accounted for approximately 3% of our recurring revenues for the years ended December 31, 2025, 2024 and 2023. Our 50 largest customers accounted for approximately 36%, 36% and 37% of our recurring revenues for the years ended December 31, 2025, 2024 and 2023, respectively.

Our non-recurring revenues are primarily derived from fees charged on installations related to a customer's initial deployment and professional services we perform for our customers, including our joint ventures. Non-recurring installation fees, although generally paid upfront upon installation, are deferred and recognized ratably over the contract term. Professional service fees are recognized in the period when the services were provided. Additionally, revenue from contract settlements, when a customer wishes to terminate their contract early, is generally treated as a contract modification and recognized ratably over the remaining term of the contract, if any. We expect non-recurring revenues to represent less than 10% of total revenues for the foreseeable future.

Operating Expenses:

Cost of Revenues. The largest components of our cost of revenues are depreciation, rental payments related to our leased IBX data centers, utility costs including electricity, bandwidth access, IBX data center employees' salaries and benefits including stock-based compensation, repairs and maintenance, supplies and equipment, and security. A majority of our cost of revenues is fixed in nature and should not vary significantly from period to period, unless we expand our existing IBX data centers or open or acquire new IBX data centers. However, there are certain costs that are considered more variable in nature, including utilities and supplies that are directly related to growth in our existing and new customer base. In addition, the cost of electricity is subject to seasonal fluctuations. Our costs of electricity may also increase as a result of the physical effects of climate change, global energy supply constraints, increased regulations driving alternative electricity generation due to environmental considerations or as a result of our election to use renewable energy sources. To the extent we incur increased utility costs, such increased costs could materially impact our financial condition, results of operations and cash flows.

Sales and Marketing. Our sales and marketing expenses consist primarily of compensation and related costs for sales and marketing personnel, including stock-based compensation, amortization of contract costs, marketing programs, public relations, promotional materials and travel, as well as bad debt expense and amortization of customer relationship intangible assets.

General and Administrative. Our general and administrative expenses consist primarily of salaries and related expenses, including stock-based compensation, accounting, legal and other professional service fees, and other general corporate expenses, such as our corporate regional headquarters office leases and depreciation expense on back office systems.

Taxation as a REIT:

We elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our 2015 taxable year. As of December 31, 2025, our REIT structure included a majority of our data center operations in the Americas and EMEA regions, as well as the data center operations in Japan, Singapore, and Malaysia. Our data center operations in other jurisdictions are operated as TRSs. We have also included our share of the assets in xScale joint ventures (with the exception of the APAC 3 Joint Venture) in our REIT structure.

As a REIT, we generally are permitted to deduct from our U.S. federal taxable income the dividends we pay to our stockholders. The taxable income represented by such dividends is not subject to U.S. federal income taxes at the entity level but is taxed in the U.S., if at all, at the stockholder level. Depending on a shareholder's citizenry and residency, the income could be taxed by other jurisdictions as well. Nevertheless, the income of our TRSs which hold our U.S. operations is subject to U.S. federal and state corporate income taxes, as applicable. Likewise, our foreign subsidiaries continue to be subject to local income taxes in jurisdictions in which they hold assets or conduct operations, regardless of whether held or conducted through TRSs or through qualified REIT subsidiaries ("QRSs") for U.S. income tax purposes. We are also subject to a separate U.S. federal corporate income tax on any gain recognized from a sale of a REIT asset where our basis in the asset is determined by reference to the basis of the asset in the hands of a C corporation (such as an asset held by us or a QRS following the liquidation or other conversion of a former TRS). This built-in-gain tax is generally applicable to any disposition of such an asset during the five-year period after the date we first owned the asset as a REIT asset to the extent of the built-in-gain based

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on the fair market value of such asset on the date we first held the asset as a REIT asset. In addition, should we recognize any gain from "prohibited transactions," we will be subject to tax on this gain at a 100% rate. "Prohibited transactions," for this purpose, are defined as dispositions of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors. If we fail to remain qualified for U.S. federal income taxation as a REIT, we will be subject to U.S. federal income taxes at regular corporate income tax rates. Even if we remain qualified for U.S. federal income taxation as a REIT, we may be subject to some federal, state, local and foreign taxes on our income and property in addition to taxes owed with respect to our TRSs' operations. In particular, while state income tax regimes often parallel the U.S. federal income tax regime for REITs, many states do not completely follow federal rules, and some may not follow them at all.

We continue to monitor our REIT compliance in order to maintain our qualification for U.S. federal income taxation as a REIT. For this and other reasons, as necessary, we may convert some of our data center operations in other countries into the REIT structure in future periods.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, making permanent or extending key provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic R&D expensing, business interest expense limitations and the qualified business income deduction for ordinary REIT dividends. The OBBBA also revises international tax rules such as the net controlled foreign corporation ("CFC") tested income (before January 1, 2026, global intangible low-taxed income) inclusion and raises the REIT asset threshold for taxable REIT subsidiaries from 20% to 25%, effective for tax years beginning after December 31, 2025. The legislation does not have a material impact on our income tax position.

On each of March 19, 2025, June 18, 2025, September 17, 2025 and December 17, 2025, we paid a quarterly cash dividend of $4.69 per share. We expect all of our 2025 quarterly distributions and other applicable distributions to equal or exceed our REIT taxable income recognized in 2025.

Results of Operations

In order to provide a framework for assessing our performance excluding the impact of foreign currency fluctuations, we supplement the year-over-year actual change in results of operations with comparative changes on a constant currency basis. Presenting constant currency results of operations is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below for further discussion.

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Years ended December 31, 2025 and 2024

Revenues. Our revenues for the years ended December 31, 2025 and 2024 were generated from the following revenue classifications and geographic regions ($ in millions):

Years Ended December 31,

$ Change

% Change

2025

%

2024

%

Actual

Actual

Constant Currency

Americas:

Recurring revenues

$

3,889 

42%

$

3,647 

42%

$

242 

7%

7%

Non-recurring revenues

222 

3%

215 

2%

7 

3%

4%

4,111 

45%

3,862 

44%

249 

6%

7%

EMEA:

Recurring revenues

2,993 

32%

2,812 

32%

181 

6%

5%

Non-recurring revenues

137 

2%

155 

2%

(18)

(12)%

(14)%

3,130 

34%

2,967 

34%

163 

5%

4%

Asia-Pacific:

Recurring revenues

1,857 

20%

1,725 

20%

132 

8%

8%

Non-recurring revenues

119 

1%

194 

2%

(75)

(39)%

(38)%

1,976 

21%

1,919 

22%

57 

3%

3%

Total:

Recurring revenues

8,739 

94%

8,184 

94%

555 

7%

7%

Non-recurring revenues

478 

6%

564 

6%

(86)

(15)%

(16)%

$

9,217 

100%

$

8,748 

100%

$

469 

5%

5%

Revenues

($ in millions)

Americas Revenues. During the year ended December 31, 2025, Americas revenues increased by $249 million or 6% (7% on a constant currency basis). Growth in Americas revenues was primarily due to:

•approximately $99 million of incremental revenues generated from IBX data center expansion projects which were completed within the twelve months ended December 31, 2025; and

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•an increase in orders from both our existing customers and new customers during the period.

The increase was partially offset by a decrease of $29 million in revenues from non-recurring services provided to our joint ventures and a decrease of $29 million driven by the Equinix Metal Wind Down. See Note 16 within the Consolidated Financial Statements.

EMEA Revenues. During the year ended December 31, 2025, EMEA revenues increased by $163 million or 5% (4% on a constant currency basis). Growth in EMEA revenues was primarily due to:

•approximately $57 million of incremental revenues generated from IBX data center expansion projects which were completed within the twelve months ended December 31, 2025; and

•an increase in orders from both our existing customers and new customers during the period.

The increase was partially offset by a decrease of $12 million in revenues from non-recurring services provided to our joint ventures.

Asia-Pacific Revenues. During the year ended December 31, 2025, Asia-Pacific revenues increased by $57 million or 3% (3% on a constant currency basis). Growth in Asia-Pacific revenues was primarily due to:

•approximately $27 million of incremental revenues generated from IBX data center expansion projects which were completed within the twelve months ended December 31, 2025; and

•an increase in orders from both our existing customers and new customers during the period.

The increase was offset by a decrease of $89 million in revenues from non-recurring services provided to our joint ventures.

Cost of Revenues. Our cost of revenues for the years ended December 31, 2025 and 2024 by geographic regions were as follows ($ in millions):

Years Ended December 31,

$ Change

% Change

2025

%

2024

%

Actual

Actual

Constant Currency

Americas

$

1,864 

41%

$

1,802 

41%

$

62 

3%

4%

EMEA

1,650 

37%

1,674 

37%

(24)

(1)%

(3)%

Asia-Pacific

994 

22%

991 

22%

3 

—%

1%

Total

$

4,508 

100%

$

4,467 

100%

$

41 

1%

1%

Cost of Revenues

($ in millions; percentages indicate expenses as a percentage of revenues)

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Americas Cost of Revenues. During the year ended December 31, 2025, Americas cost of revenues increased by $62 million or 3% (4% on a constant currency basis). The increase in our Americas cost of revenues was primarily due to:

•approximately $29 million of higher depreciation expense driven by IBX data center expansions and acceleration of depreciation expense for certain assets with shortened useful lives; and

•$23 million of higher utilities costs, driven by both increases in power costs and higher utility usage.

The remainder of the increase was driven by higher office and accretion expenses, offset by lower costs to provide non-recurring services.

EMEA Cost of Revenues. During the year ended December 31, 2025, EMEA cost of revenues decreased by $24 million or 1% (3% on a constant currency basis). The decrease in our EMEA cost of revenues was primarily due to lower utilities costs as a result of decreases in power prices in Germany, Netherlands and the United Kingdom, partially offset by:

•$17 million of higher rent and facilities cost; and

•$17 million of higher compensation costs, including stock-based compensation.

Asia-Pacific Cost of Revenues. Our Asia-Pacific cost of revenues did not materially change during the year ended December 31, 2025 compared to the year ended December 31, 2024 as increases in depreciation expense and compensation costs were substantially offset by decreases in utilities costs and costs to provide non-recurring services.

We expect cost of revenues to increase across all three regions in line with the growth of our business, including from the impact of acquisitions.

Sales and Marketing Expenses. Our sales and marketing expenses for the years ended December 31, 2025 and 2024 by geographic regions were as follows ($ in millions):

Years ended December 31,

$ Change

% Change

2025

%

2024

%

Actual

Actual

Constant Currency

Americas

$

582 

64%

$

575 

65%

$

7 

1%

2%

EMEA

208 

23%

199 

22%

9 

5%

2%

Asia-Pacific

113 

13%

117 

13%

(4)

(3)%

(3)%

Total

$

903 

100%

$

891 

100%

$

12 

1%

1%

Sales and Marketing Expenses

($ in millions; percentages indicate expenses as a percentage of revenues)

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Americas Sales and Marketing Expenses. Our Americas sales and marketing expenses did not materially change during the year ended December 31, 2025 compared to the year ended December 31, 2024 as increases in advertising and consulting costs were substantially offset by decreases in bad debt expense.

EMEA Sales and Marketing Expenses. During the year ended December 31, 2025, EMEA sales and marketing increased by $9 million or 5% (2% on a constant currency basis) driven by insignificant increases across various categories.

Asia-Pacific Sales and Marketing Expenses. Our Asia-Pacific sales and marketing expenses did not materially change during the year ended December 31, 2025 compared to the year ended December 31, 2024.

We anticipate that we will continue to invest in sales and marketing initiatives across our three regions in line with the growth of our business. We expect our Americas sales and marketing expenses as a percentage of revenues to be higher than those of our other regions since certain global sales and marketing functions are located within the U.S.

General and Administrative Expenses. Our general and administrative expenses for the years ended December 31, 2025 and 2024 by geographic regions were as follows ($ in millions):

Years Ended December 31,

$ Change

% Change

2025

%

2024

%

Actual

Actual

Constant Currency

Americas

$

1,256 

68%

$

1,204 

68%

$

52 

4%

5%

EMEA

351 

19%

335 

19%

16 

5%

3%

Asia-Pacific

233 

13%

227 

13%

6 

3%

3%

Total

$

1,840 

100%

$

1,766 

100%

$

74 

4%

4%

General and Administrative Expenses

($ in millions; percentages indicate expenses as a percentage of revenues)

Americas General and Administrative Expenses. During the year ended December 31, 2025, Americas general and administrative expenses increased by $52 million or 4% (5% on a constant currency basis). The increase in our Americas general and administrative expenses was primarily due to $43 million of higher compensation costs, including stock-based compensation. The remainder of the increase was driven by higher costs across various categories including training and recruiting expense, tax and license fees and other operating expenses.

EMEA General and Administrative Expenses. During the year ended December 31, 2025, EMEA general and administrative expenses increased by $16 million or 5% (3% on a constant currency basis). The increase in our EMEA general and administrative expenses was primarily due to $25 million of higher compensation costs, including stock-based compensation, partially offset by lower consulting costs.

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Asia-Pacific General and Administrative Expenses. Our Asia-Pacific general and administrative expenses did not materially change during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Going forward, although we are carefully monitoring our spending, we expect our general and administrative expenses to increase across all three regions as we continue to invest in our operations to support our growth, including investments to enhance our technology platform, to maintain our qualification for taxation as a REIT and to integrate recent acquisitions. Additionally, given that our corporate headquarters is located in the U.S., we expect the Americas general and administrative expenses as a percentage of revenues to be higher than that of other regions.

Restructuring and Other Exit Charges. During the years ended December 31, 2025 and December 31, 2024, we recorded restructuring and other exit charges of $33 million and $31 million, respectively, primarily related to severance and other employee costs. See Note 16 within the Consolidated Financial Statements.

Transaction Costs. During the years ended December 31, 2025 and 2024, we recorded transaction costs of $18 million and $50 million, respectively. These transaction costs were incurred in connection with evaluating and completing acquisitions and the formation of joint ventures. See Notes 3 and 5 within the Consolidated Financial Statements.

Impairment Charges. During the year ended December 31, 2025, we determined that the carrying amounts of certain long-lived assets may not be fully recoverable as we no longer intend to hold these assets long-term. We recognized impairment charges of $68 million during 2025 to reflect management’s estimate of fair value of these long-lived assets based primarily on sales of similar assets and ongoing negotiations with third parties. During the year ended December 31, 2024, we recorded impairment charges of $233 million as a result of the Equinix Metal Wind Down and current and projected future losses at a Hong Kong IBX. See Note 17 within the Consolidated Financial Statements.

Gain or Loss on Asset Sales. During the year ended December 31, 2025, we did not record a significant amount of gain or loss on asset sales. During the year ended December 31, 2024, we recorded a gain of $18 million related to the sale of the Silicon Valley 12x ("SV12x") data center. See Note 5 within the Consolidated Financial Statements.

Income from Operations. Our income from operations increased by $520 million or 39% in the year ended December 31, 2025 as compared to the same period in 2024. This increase is driven by the factors described above.

Interest Income. During the year ended December 31, 2025, interest income increased by $56 million or 41%. The increase was primarily due to interest income earned on a higher average balance of cash, cash equivalents and short-term investments as well as on the AMER 2 Loan further described in Note 15 within the Consolidated Financial Statements.

Interest Expense. During the year ended December 31, 2025, interest expense increased by $70 million or 15%. The increase was primarily due to the issuance of senior notes during 2025 and 2024. This increase was partially offset by the repayment of senior notes which matured during 2025 and 2024. See Note 10 within the Consolidated Financial Statements.

During the years ended December 31, 2025 and 2024, we capitalized $79 million and $36 million, respectively, of interest expense to construction in progress.

Other Income or Expense. We did not record a significant amount of other income or expense during the year ended December 31, 2025. For the year ended December 31, 2024, we recorded net other expense of $17 million, largely driven by our share of losses incurred on our equity method investments in our xScale joint ventures.

Gain or Loss on Debt Extinguishment. We did not record a significant amount of gain or loss on debt extinguishment during the year ended December 31, 2025. During the year ended December 31, 2024, we recorded $16 million of net loss on debt extinguishment primarily due to the modification of a financing obligation on a property in the Americas region.

Income Taxes. We operate as a REIT for U.S. federal income tax purposes. As a REIT, we are generally not subject to U.S. federal income taxes on our taxable income distributed to stockholders. We intend to distribute or have distributed the entire taxable income generated by the operations of our REIT and QRSs for the tax years ended December 31, 2025 and 2024, respectively. As such, other than certain state income taxes and foreign

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income and withholding taxes, no provision for income taxes has been included for our REIT and QRSs in the accompanying consolidated financial statements for the years ended December 31, 2025 and 2024.

We have made TRS elections for some of our subsidiaries in and outside the U.S. In general, a TRS may provide services that would otherwise be considered impermissible for REITs to provide and may hold assets that may not be REIT compliant.

U.S. income taxes for the TRS entities located in the U.S. and foreign income taxes for our foreign operations, regardless of whether the foreign operations are operated as QRSs or TRSs, have been accrued, as necessary, for the years ended December 31, 2025 and 2024.

For the years ended December 31, 2025 and 2024, we recorded $160 million and $161 million of income tax expenses, respectively. Our effective tax rates were 10.6% and 16.5%, respectively, for the years ended December 31, 2025 and 2024.

Net Income. Our net income increased by $534 million or 66% in the year ended December 31, 2025 as compared to the same period in 2024. This increase is driven by the factors described above.

Adjusted EBITDA. We define adjusted EBITDA as net income excluding income tax expense, interest income, interest expense, other income or expense, gain or loss on debt extinguishment, depreciation, amortization, accretion, stock-based compensation expense, restructuring and other exit charges, impairment charges, transaction costs, and gain or loss on asset sales. See "Non-GAAP Financial Measures" below for more information about adjusted EBITDA and a reconciliation of adjusted EBITDA to net income. Our adjusted EBITDA for the years ended December 31, 2025 and 2024 by geographic regions was as follows ($ in millions):

Years Ended December 31,

$ Change

% Change

2025

%

2024

%

Actual

Actual

Constant Currency

Americas

$

1,890 

42 

%

$

1,709 

41 

%

$

181 

11 

%

11 

%

EMEA

1,561 

34 

%

1,378 

34 

%

183 

13 

%

12 

%

Asia-Pacific

1,079 

24 

%

1,010 

25 

%

69 

7 

%

6 

%

Total

$

4,530 

100%

$

4,097 

100%

$

433 

11 

%

10 

%

Americas Adjusted EBITDA. During the year ended December 31, 2025, Americas adjusted EBITDA increased by $181 million or 11% (11% on a constant currency basis), primarily due to higher revenues as a result of IBX data center expansion activity and organic growth, partially offset by lower revenues as a result of non-recurring services provided to our joint ventures, as described above.

EMEA Adjusted EBITDA. During the year ended December 31, 2025, EMEA adjusted EBITDA increased by $183 million or 13% (12% on a constant currency basis), primarily due to higher revenues as a result of IBX data center expansion activity and organic growth and lower utilities costs, partially offset by lower revenues as a result of non-recurring services provided to our joint ventures, as described above.

Asia-Pacific Adjusted EBITDA. During the year ended December 31, 2025, Asia-Pacific adjusted EBITDA increased by $69 million or 7% (6% on a constant currency basis), primarily due to higher revenues as a result of IBX data center expansion activity and organic growth, offset by lower revenues as a result of non-recurring services provided to our joint ventures, as described above.

Non-GAAP Financial Measures

We provide all information required in accordance with GAAP, but we believe that evaluating our ongoing results of operations may be difficult if limited to reviewing only GAAP financial measures. Accordingly, we also use non-GAAP financial measures to evaluate our operations.

Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP. Non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures. As such, we provide a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

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Investors should note that the non-GAAP financial measures used by us may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as those of other companies. Investors should therefore exercise caution when comparing non-GAAP financial measures used by us to similarly titled non-GAAP financial measures of other companies.

Our primary non-GAAP financial measures include Adjusted EBITDA and Adjusted Funds from Operations (“AFFO”), as described below. We present these measures to provide investors with additional tools to evaluate our results in a manner that focuses on what management believes to be our core, ongoing business operations. These measures exclude items which we believe are generally not relevant to assessing our long-term performance. Both measures eliminate the impacts of depreciation and amortization, which are derived from historical costs and we believe are not indicative of current or future expenditures, and other items for which the frequency and amount of charges can vary based on the timing and significance of individual transactions. We believe that presenting these non-GAAP financial measures provides consistency and comparability with past reports and that if we did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze our business effectively.

Adjusted EBITDA

Adjusted EBITDA is used by management to evaluate the operating strength and performance of our core, ongoing business, without regard to our capital or tax structures. It also aids in assessing the performance of, making operating decisions for, and allocating resources to our operating segments. In addition to the uses described above, we believe this measure provides investors with a better understanding of the operating performance of the business and its ability to perform in subsequent periods.

We define adjusted EBITDA as net income excluding:

•income tax expense

•interest income

•interest expense

•other income or expense

•gain or loss on debt extinguishment

•depreciation, amortization and accretion expense

•stock-based compensation expense

•restructuring and other exit charges, which primarily include employee severance, facility closure costs, lease or other contract termination costs and advisory fees related to the realignment of our management structure, operations or products and other exit activities

•impairment charges

•transaction costs

•gain or loss on asset sales

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The following table presents a reconciliation of Adjusted EBITDA to net income (in millions):

Years Ended December 31,

2025

2024

2023

Net income

$

1,348 

$

814 

$

969 

Income tax expense

160 

161 

155 

Interest income

(193)

(137)

(94)

Interest expense

527 

457 

402 

Other (income) expense

7 

17 

11 

(Gain) loss on debt extinguishment

(1)

16 

— 

Depreciation, amortization, and accretion expense

2,066 

2,011 

1,844 

Stock-based compensation expense

498 

462 

407 

Restructuring and other exit charges

33 

31 

— 

Impairment charges

68 

233 

— 

Transaction costs

18 

50 

13 

(Gain) loss on asset sales

(1)

(18)

(5)

Adjusted EBITDA

$

4,530 

$

4,097 

$

3,702 

Funds from Operations ("FFO") and AFFO

AFFO is derived from Funds from Operations (FFO) calculated in accordance with the standards established by the National Association of Real Estate Investment Trusts. Both FFO and AFFO are non-GAAP measures commonly used in the REIT industry. Although our measures may not be directly comparable to similar measures used by other companies, we believe that the presentation of these measures provides investors with an additional tool for comparing our performance with the performance of other companies in the REIT industry. Additionally, AFFO is a performance measure used in certain of our employee incentive programs and we believe it is a useful measure in assessing our dividend paying capacity as it isolates the cash impact of certain income and expense items and considers the impact of recurring capital expenditures.

We define FFO as net income attributable to common stockholders excluding:

•gain or loss from the disposition of real estate assets

•depreciation and amortization expense on real estate assets

•adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items

We define AFFO as FFO adjusted for:

•depreciation and amortization expense on non-real estate assets

•accretion expense

•stock-based compensation expense

•stock-based charitable contributions

•restructuring and other exit charges, as described above

•impairment charges

•transaction costs

•an adjustment to remove the impacts of straight-lining installation revenue

•an adjustment to remove the impacts of straight-lining rent expense

•an adjustment to remove the impacts of straight-lining contract costs

•amortization of deferred financing costs and debt discounts and premiums

•gain or loss from the disposition of non-real estate assets

•gain or loss on debt extinguishment

•an income tax expense adjustment, which represents the non-cash tax impact due to changes in valuation allowances, uncertain tax positions and deferred taxes

•recurring capital expenditures, which represent expenditures to extend the useful life of data centers or other assets that are required to support current revenues

•net income or loss from discontinued operations, net of tax

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•adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items

The following tables present reconciliations of FFO and AFFO to net income (in millions):

Years Ended December 31,

2025

2024

2023

Net income

$

1,348 

$

814 

$

969 

Net (income) loss attributable to non-controlling interests

2 

1 

— 

Net income attributable to common stockholders

1,350 

815 

969 

Adjustments:

Real estate depreciation

1,282 

1,239 

1,143 

(Gain) loss on disposition of real estate assets

— 

(20)

1 

Adjustments for FFO from unconsolidated joint ventures

36 

27 

17 

FFO attributable to common stockholders

$

2,668 

$

2,061 

$

2,130 

Years Ended December 31,

2025

2024

2023

FFO attributable to common stockholders

$

2,668 

$

2,061 

$

2,130 

Adjustments:

Installation revenue adjustment

20 

(4)

4 

Straight-line rent expense adjustment

5 

(3)

12 

Contract cost adjustment

(52)

(27)

(47)

Amortization of deferred financing costs and debt discounts

23 

20 

19 

Stock-based compensation expense

498 

462 

407 

Stock-based charitable contributions

3 

3 

3 

Non-real estate depreciation expense

568 

562 

494 

(Gain) loss on disposition of non-real estate assets

(1)

— 

— 

Amortization expense

200 

208 

208 

Accretion expense adjustment

16 

2 

(1)

Recurring capital expenditures

(284)

(250)

(219)

(Gain) loss on debt extinguishment

(1)

16 

— 

Restructuring and other exit charges

33 

31 

— 

Transaction costs

18 

50 

13 

Impairment charges

68 

233 

2 

Income tax expense adjustment

(24)

(2)

(12)

Adjustments for AFFO from unconsolidated joint ventures

3 

(6)

6 

AFFO attributable to common stockholders

$

3,761 

$

3,356 

$

3,019 

Constant Currency Presentation

Our revenues and certain operating expenses (cost of revenues, sales and marketing and general and administrative expenses) from our international operations have represented and will continue to represent a significant portion of our total revenues and certain operating expenses. As a result, our revenues and certain operating expenses have been and will continue to be affected by changes in the U.S. dollar against major international currencies. During the year ended December 31, 2025 as compared to the same period in 2024, the U.S. dollar was stronger relative to the Brazilian real and Canadian dollar, which resulted in an unfavorable foreign currency impact on revenue and operating income, and a favorable foreign currency impact on operating expenses. During the year ended December 31, 2025 as compared to the same period in 2024, the U.S. dollar was weaker relative to the British pound and euro, which resulted in a favorable foreign currency impact on revenue and operating income, and an unfavorable foreign currency impact on operating expenses. In order to provide a

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framework for assessing how each of our business segments performed excluding the impact of foreign currency fluctuations, we present period-over-period percentage changes in our revenues and certain operating expenses on a constant currency basis in addition to the historical amounts as reported. Our constant currency presentation excludes the impact of our foreign currency cash flow hedging activities. Presenting constant currency results of operations is a non-GAAP financial measure and is not meant to be considered in isolation or as an alternative to GAAP results of operations. However, we have presented this non-GAAP financial measure to provide investors with an additional tool to evaluate our results of operations. To present this information, our current period revenues and certain operating expenses denominated in currencies other than the U.S. dollar are converted into U.S. dollars at constant exchange rates rather than the actual exchange rates in effect during the respective periods (i.e. average rates in effect for the year ended December 31, 2024 are used as exchange rates for the year ended December 31, 2025 when comparing the year ended December 31, 2025 with the year ended December 31, 2024).

Liquidity and Capital Resources

Sources and Uses of Cash

Customer collections are our primary source of cash. We believe we have a strong customer base, and have continued to experience relatively strong collections. As of December 31, 2025, our principle sources of liquidity were $3.2 billion of cash, cash equivalents and short-term investments. In addition to our cash balance, we had approximately $4.0 billion of additional liquidity available to us from our $4.0 billion revolving facility and general access to both public and private debt and the equity capital markets. We also have additional liquidity available to us from our 2024 ATM program, under which we may offer and sell from time to time our common stock in "at the market" transactions on either a spot or forward basis. As of December 31, 2025, we had approximately $1.2 billion available for sale remaining under the 2024 ATM Program.

We believe we have sufficient cash, coupled with anticipated cash generated from operating activities and external financing sources, to meet our operating requirements, including repayment of the current portion of our debt as it becomes due, distribution of dividends, completion of our publicly-announced acquisitions, ordinary costs to operate the business, and expansion projects.

As we continue to grow, we may pursue additional expansion opportunities, primarily the build out of new IBX data centers, in certain of our existing markets which are at or near capacity within the next year, as well as potential acquisitions and joint ventures. If the opportunity to expand is greater than planned we may further increase the level of capital expenditures to support this growth as well as pursue additional business and real estate acquisitions or joint ventures, provided that we have or can access sufficient funding to pursue such expansion opportunities. We may elect to access the equity or debt markets from time to time opportunistically, particularly if financing is available on attractive terms. We will continue to evaluate our operating requirements and financial resources in light of future developments.

Cash Flow

Years Ended December 31,

2025

2024

Change

(in millions)

Net cash provided by operating activities

$

3,911 

$

3,249 

$

662 

Net cash used in investing activities

(6,484)

(3,937)

(2,547)

Net cash provided by financing activities

1,272 

1,723 

(451)

Operating Activities

Our cash provided by our operations is generated by colocation, interconnection, managed infrastructure and other revenues. Our primary uses of cash from our operating activities include compensation and related costs, interest payments, other general corporate expenditures and taxes. Net cash provided by operating activities increased by $662 million during the year ended December 31, 2025 as compared to December 31, 2024, primarily driven by improved results of operations partially offset by increases in cash paid for costs and operating expenses.

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Investing Activities

Net cash used in investing activities increased by $2.5 billion during the year ended December 31, 2025 as compared to December 31, 2024, primarily due to:

•$1.4 billion increase in purchases of short-term investments;

•$1.2 billion increase in capital expenditures;

•$657 million increase in real estate acquisitions; and

•$251 million increase in business acquisitions, net of cash acquired, including the TIM Acquisition (see Note 3 within the Consolidated Financial Statements).

This increase was partially offset by $1.0 billion in proceeds from the maturity of short-term investments.

Financing Activities

Net cash provided by financing activities decreased by $451 million for the year ended December 31, 2025 as compared to December 31, 2024, primarily driven by:

•$1.6 billion decrease in proceeds from the 2022 and 2024 ATM Programs;

•$213 million increase in dividend distributions; and

•$200 million increase in the repayment of senior notes.

The decrease was partially offset by $1.5 billion in proceeds from senior notes.

Material Cash Commitments

As of December 31, 2025, our principal commitments were primarily comprised of:

•approximately $18.4 billion of principal from our senior notes (gross of debt issuance costs and debt discounts);

•approximately $4.2 billion of interest on mortgage payable, other loans payable, senior notes and term loans, based on their respective interest rates and recognized over the life of these instruments, and the credit facility fee for the revolving credit facility;

•$703 million of principal from our term loans, mortgage payable and other loans payable (gross of debt issuance costs and debt discounts);

•approximately $5.3 billion of total lease payments, which represents lease payments under finance and operating lease arrangements, including renewal options that are reasonably certain to be exercised;

•approximately $6.3 billion of unaccrued capital expenditure contractual commitments, primarily for real estate purchases, IBX infrastructure equipment not yet delivered and labor not yet provided in connection with the work necessary to complete construction and open IBX data center expansion projects prior to making them available to customers for installation, the majority of which is payable within the next 12 months; and

•approximately $2.1 billion of other non-capital purchase commitments, such as commitments to purchase power in select locations and other open purchase orders, which contractually bind us for goods, services or arrangements to be delivered or provided during 2026 and beyond, the majority of which is payable within the next two years.

We believe that our sources of liquidity, including our expected future operating cash flows, are sized to adequately meet both the near and long-term material cash commitments for the foreseeable future. For further information on maturities of lease liabilities and debt instruments, see Notes 9 and 10, respectively, within the Consolidated Financial Statements.

Other Contractual Obligations

We have additional future equity contributions and loan commitments to our joint ventures. For additional information, see the "Equity Method Investments" in Note 5 within the Consolidated Financial Statements.

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Additionally, we entered into lease agreements with various landlords primarily for data center spaces and ground leases which have not yet commenced as of December 31, 2025. For additional information, see “Maturities of Lease Liabilities” in Note 9 within the Consolidated Financial Statements.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our financial statements requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. Management bases its assumptions, estimates and judgments on historical experience, current trends and various other factors that we believe to be reasonable under the circumstances. However, because future events and their effects cannot be determined with certainty, actual results may differ from these assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 1 to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. Management believes that application of the following accounting policies involves a significant level of estimation uncertainty that have had or are reasonably likely to have a material impact on our consolidated financial statements:

•    Accounting for property, plant and equipment and finite-lived intangible assets; and

•    Accounting for leases.

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Description

Estimation Uncertainties

Effect if Actual Results Differ from Assumptions

Accounting for Property, Plant and Equipment and Finite-Lived Intangible Assets

We have a substantial amount of property, plant and equipment recorded on our consolidated balance sheets. The majority of our property, plant and equipment balance represents the costs incurred to build out or acquire our IBX data centers. We depreciate our property, plant and equipment using the straight-line method over the estimated useful lives of the assets (subject to the term of the lease in the case of leased assets or leasehold improvements and integral equipment located in leased properties).

Accounting for property, plant and equipment includes determining the appropriate period over which to depreciate such assets, assessing such assets for potential impairment and assessing the asset retirement obligations required for certain leased properties that require us to return the leased properties back to their original condition at the time we decide to exit a lease property. We assess our property, plant and equipment for potential impairment together with finite-lived intangible assets and lease right-of-use ("ROU") assets at the asset group level.

Judgments are required in arriving at the estimated useful life of an asset. Judgments are also required in estimating the fair value of a liability for an asset retirement obligation. Significant assumptions include retirement costs, timing of retirement and inflation rates. We periodically review these estimates and changes to these estimates could have a significant impact on our financial position and results of operations.

We review our asset groups on an ongoing basis to identify any events or changes in circumstances indicating that the carrying amount of an asset group may not be recoverable, such as a significant decrease in market price of an asset group, a significant adverse change in the extent or manner in which an asset group is being used, a significant adverse change in legal factors or business climate that could affect the value of an asset group or a continuous deterioration of our financial condition. This assessment requires assumptions and estimates derived from a review of our actual and forecasted operating results, approved business plans, future economic conditions and other market data. If a potential impairment trigger is identified, the measurement of an impairment loss requires assumptions and estimates of undiscounted and discounted future cash flows, and assumptions about the market price of assets. These assumptions and estimates require significant judgment and are inherently uncertain.

As of December 31, 2025 and 2024, we had property, plant and equipment of $23.6 billion and $19.2 billion, respectively. During the years ended December 31, 2025, 2024 and 2023, we recorded depreciation expense of $1.9 billion, $1.8 billion, and $1.6 billion, respectively. We evaluated the estimated useful lives of our property, plant and equipment, and made certain revisions to these estimates during the years ended December 31, 2025 and 2024. Further changes in our estimated useful lives of our property, plant and equipment could have a significant impact on our results of operations. We recorded $53 million and $166 million impairment charges on property, plant and equipment during the years ended December 31, 2025 and 2024.

As of December 31, 2025 and 2024, we had asset retirement obligations of $228 million and $109 million, respectively.

The balance of our other intangible assets, net, as of December 31, 2025 and 2024 was $1.3 billion and $1.4 billion, respectively. We recorded $29 million impairment charges on finite-lived intangible assets during the year ended December 31, 2024.

Accounting for Leases

A significant portion of our data center spaces, office spaces and equipment are leased. Each time we enter into a new lease or lease amendment, we analyze each contract for the proper accounting, including assessing if it should be classified as an operating or finance lease.

ROU assets are assessed for impairment at the asset group level along with property, plant and equipment as discussed above.

Determination of the accounting treatment, including the result of the lease classification test for each new lease, lease amendment, or lease term reassessment is dependent on a variety of judgments, such as identification of lease and non-lease components, allocation of total consideration between lease and non-lease components, determination of lease term, including assessing the likelihood of lease renewals, valuation of leased property, and establishing the incremental borrowing rate to calculate the present value of the minimum lease payment for the lease test. The judgments used in the accounting for leases are inherently subjective; different assumptions or estimates could result in different accounting treatment for a lease.

Lease assumptions and estimates are determined and applied at the inception of the leases or at the lease modification or reassessment date. As of both December 31, 2025 and 2024, the total operating lease ROU assets were $1.4 billion and operating lease liabilities were $1.5 billion, respectively. As of December 31, 2025 and 2024, finance lease ROU assets were $2.3 billion and $2.2 billion, respectively and finance lease liabilities were $2.4 billion and $2.3 billion, respectively. For the years ended December 31, 2025, 2024 and 2023, we recorded finance lease costs of $310 million, $294 million and $280 million, respectively, and recorded rent expense of approximately $238 million, $229 million and $243 million, respectively.

We recorded $15 million and $38 million impairment charges on operating lease ROU assets during the years ended December 31, 2025 and 2024.

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Recent Accounting Pronouncements

See "Recent Accounting Pronouncements" in Note 1 within the Consolidated Financial Statements.

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