Digital Realty expects lower annual income as consumers reduce spending

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Digital Realty expects lower annual income as consumers reduce spending
Digital Realty expects lower annual income as consumers reduce spending

Digital Realty Trust projected fiscal 2024 revenue below market expectations as clients reduced their investment in data centers owing to an uncertain economy.

On Thursday, Digital Realty Trust (DLR.N) opened a new tab and estimated fiscal 2024 revenue below market forecasts as clients cut investment in data centers due to an uncertain economy.

Shares of the Austin, Texas-based corporation slid 4% in an extended session.

Amid high financing costs, corporations are turning towards larger data center operators like Equinix (EQIX.O), which has a broad spectrum of services, reducing demand for a smaller rival like Digital Realty. Equinix anticipated positive core earnings on Wednesday.

Digital Realty leases out managed data centers to clients in a variety of industries, including cloud and information technology, social networking and communications, and manufacturing.

Late last year, the company announced a $7 billion collaboration with US investment firm Blackstone (BX.N.) to create data centers.

Blackstone will own 80% of the joint venture, with Digital Realty holding the other 20%.

According to LSEG statistics, Digital Realty forecasts revenue in the range of $5.55 billion to $5.65 billion for fiscal 2024, compared to estimates of $5.76 billion previously.

Revenue for the fourth quarter ended December 31 was $1.37 billion, missing analysts’ average forecast of $1.39 billion.

The company reported funds from operations (a measure that captures trends in occupancy rates, rental rates, and operational costs) of $1.53 per share, up from $1.45 per share the previous year.

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