Digital Realty Trust Inc (NYSE:DLR) reported fourth-quarter 2025 financial results that showcased robust top-line growth and a significant earnings beat, though a sharp year-over-year decline in net income per share highlights the complex financial picture for the global data center giant. The company's performance and forward guidance suggest it is successfully navigating the demands of an AI-driven market, a narrative reflected in recent positive stock momentum.
Earnings and Revenue Performance Versus Estimates
Digital Realty's quarterly results comfortably exceeded analyst expectations on key profitability metrics, while revenue growth was solid.
- Core FFO Per Share: The company reported Core Funds From Operations (FFO) of $1.86 per share for Q4 2025. This significantly outpaced the analyst estimate of $0.31.
- Revenue: Total operating revenue reached $1.63 billion, a 4% sequential increase and a 14% jump from the year-ago quarter. This came in above the estimated $1.59 billion.
- Net Income Per Share: On a GAAP basis, net income available to common stockholders was $0.24 per share. While this marked an improvement from the previous quarter's $0.15, it represents a notable decline from the $0.51 per share reported in Q4 2024. This decrease is attributed to factors including a provision for impairment and higher operating expenses.
Market Reaction and Price Action
The market's reaction in the immediate aftermath has been neutral in after-hours trading. However, a look at recent performance indicates a positive trend leading up to the earnings announcement, suggesting investor optimism about the company's positioning.
- After-Market Performance: The stock showed no movement (0.0%) in after-hours trading following the release.
- Recent Momentum: Over the past month, DLR shares have gained approximately 6.3%, with a 3.7% increase over the last two weeks. This pre-earnings rally aligns with broader market narratives, highlighted in recent news, that frame data center operators like Digital Realty as key infrastructure beneficiaries of artificial intelligence expansion.
Key Highlights from the Quarterly Report
Beyond the headline numbers, the earnings release underscored strong operational execution and provided clear visibility into future growth.
- Record Leasing Activity: The company signed total bookings expected to generate $400 million in annualized GAAP rental revenue at 100% share. Notably, its smaller-scale "0-1 megawatt plus interconnection" category contributed a record $96 million at Digital Realty's share, indicating robust demand from a broad customer base.
- Substantial Backlog: The backlog of signed-but-not-commenced leases stood at $817 million of annualized GAAP base rent at year-end, providing a strong foundation for 2026 revenue.
- Pricing Power: Rental rates on renewal leases increased by 6.1% on a cash basis, demonstrating the company's ability to push through price increases.
- Strategic Capital Management: The quarter featured significant balance sheet activity, including a €1.4 billion debt issuance and the early repayment of 2026 notes, aimed at extending maturity profiles and managing interest costs.
Forward Outlook Versus Analyst Expectations
Digital Realty provided detailed guidance for 2026, which offers a point of comparison against existing analyst forecasts.
The company introduced a 2026 Core FFO per share outlook of $7.90 to $8.00. This range appears to set a baseline for the year. For context, analyst estimates for the company's sales in 2026 stand at $6.77 billion. Digital Realty's own revenue guidance for the year is $6.60 to $6.70 billion, which is roughly in line with the lower end of the analyst sales forecast. The company also expects "Same-Capital" cash net operating income (NOI) growth of 4.0% to 5.0%.
CEO Andy Power stated the results were driven by "robust top-line growth, record leasing across our 0‑1 megawatt plus interconnection offering, and a substantial backlog that provides clear revenue visibility into 2026 and beyond."
For a detailed breakdown of future quarterly estimates and historical earnings data, you can review the Digital Realty earnings and estimates page here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendation, or an offer to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
