Digital Realty Trust DLR is slated to report third-quarter 2024 results on Oct. 24 after the closing bell. The quarterly results are expected to reflect year-over-year growth in both revenues and funds from operations (FFO) per share.
 
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

This Austin, TX-based data center real estate investment trust (REIT) reported a core FFO per share of $1.65 in the prior quarter, outpacing the Zacks Consensus Estimate of $1.63. The quarterly results reflected healthy leasing activity and an increase in rental rates. 

Over the trailing four quarters, Digital Realty’s core FFO per share surpassed the Zacks Consensus Estimate on two occasions, met once and missed on the other occasion, the average beat being 0.77%. This is depicted in the chart below:

Digital Realty Trust, Inc. Price and EPS Surprise

Digital Realty Trust, Inc. price-eps-surprise | Digital Realty Trust, Inc. Quote

Factors to Consider for DLR’s Q3 Earnings

Demand for data center infrastructure remains strong, fueled by enterprise digital transformation, cloud computing growth, the Internet of Things and Big Data. Rising reliance on third-party IT infrastructure and new drivers like AI and edge computing are boosting global demand for digital infrastructure.

Digital Realty, with a vast portfolio of data centers across North America, Europe, South America, Asia, Australia and Africa, is likely to have benefited from this trend, aiding its Q3 earnings.

The company’s high-quality, diversified customer base includes cloud, content, IT, network, and financial sectors, with many tenants being investment-grade and using multiple locations. This broad and stable customer mix is likely to have supported steady revenue generation, contributing to top-line growth in the quarter.

Digital Realty anticipated accelerating top-line and bottom-line growth for the remainder of 2024 with record commencements in the second quarter and a healthy backlog of favorably priced leases ready to commence in the second half.

The Zacks Consensus Estimate for quarterly rental revenues is pegged at $949.28 million, up 7% from $886.96 billion reported in the year-ago quarter.

Also, Digital Realty’s interconnection solutions are expected to have gained from solid demand in the quarter under discussion. The Zacks Consensus Estimate for interconnection & other revenues currently stands at $112.1 million, indicating a 4.5% increase from the year-ago quarter.

The consensus estimate for total quarterly revenues is pegged at $1.44 billion, suggesting a year-over-year increase of 2.34%.

However, high interest rates are anticipated to have cast a pall on its quarterly performance to some extent. Elevated rates imply high borrowing costs for the company, affecting its ability to purchase or develop real estate.

Moreover, the consensus mark for revenues from tenant reimbursement is pegged at $358.35 million, down 10.5% from $400.35 million reported in the prior-year quarter.

Digital Realty’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the company’s quarterly FFO per share has remained unrevised at $1.67 over the past month. However, the figure indicates a year-over-year increase of 3.09%.