Why Digital Realty Trust Shares Are Sliding Today

Digital Realty Trust, Inc. DLR shares are sliding after the company reported fourth-quarter financial results yesterday and issued FY24 guidance below estimates.

Revenue of $1.369 billion, up 11% Y/Y, missed the consensus of $1.394 billion.

Adjusted EBITDA rose 9% Y/Y to $700 million in the fourth quarter of 2023, a 2% increase from the previous quarter and 9% increase over the same quarter last year. 

Core FFO per share declined to $1.63 in the quarter from $1.65 a year ago, missing the consensus of $1.64.

Digital Realty reported rental rate increases on renewal leases of 8.2% on a cash basis in the fourth quarter.

The company inked total bookings in the quarter, which are expected to generate $110 million of annualized GAAP rental revenue, including a $39 million contribution from the 0–1 megawatt category and $13 million contribution from interconnection.

As of December 31, 2023, Digital Realty had approximately $17.4 billion of total debt and cash and cash equivalent of $1.63 billion.

Outlook: For FY24, the company projects core FFO per share of $6.60-$6.75 (consensus $6.83) and revenue of $5.550 billion – $5.650 billion (vs. consensus: $5.76 billion).

President & Chief Executive Officer Andy Power stated, “Our fourth quarter results marked the culmination of a transformative year for Digital Realty.”

Price Action: DLR shares are down 7.24% at $137.85 on the last check Friday.