TL;DR · 30-second read
The Short Version
Digital Realty is one of the world’s biggest landlords for data centers, the warehouse-sized buildings full of computers that run the internet and the artificial intelligence boom. From July through September, its sales jumped 21% from a year earlier, to $1.9 billion.
The catch: its profit per share grew only about half as fast. Tenants are moving in and paying rent, but less of each new dollar is reaching shareholders.
It also signed a record batch of new leases, expected to bring in about $855 million a year once tenants move in. More growth is already lined up.
Digital Realty Trust (NYSE: DLR) reported third-quarter 2026 total revenues of $1.9 billion on October 29. That was 21% above the same quarter last year and 10% above the second quarter, once $201 million of one-time promote income booked in the second quarter is excluded. Net income was $194 million, or $0.48 per share to common stockholders. Core funds from operations (Core FFO, the real estate industry’s preferred earnings measure) came to $2.10 per share excluding net promote, against $1.89 a year earlier and $2.13 in the prior quarter.
The company signed bookings expected to generate $855 million of annualized rental revenue at 100% share, or $627 million at Digital Realty’s own share, which Chief Executive Andy Power called record leasing. TradingView reported that the company also lifted its 2026 outlook alongside the results.
Executive Summary
Digital Realty’s quarter answers one question clearly and raises another. The clear answer is that data center demand is showing up as recognized revenue, not just signed paper. A 10% sequential revenue gain is unusually fast for a landlord whose income comes from long-term leases, and the 21% year-over-year rise confirms the trend is not a one-quarter blip.
The open question is how much of that revenue reaches shareholders. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) grew 13% year over year and was flat sequentially. Core FFO per share grew about 11% year over year and edged down three cents from the second quarter. Top-line growth is running roughly twice as fast as per-share earnings growth.
Behind both sits a record $855 million of new bookings and a development pipeline of roughly 9.8 gigawatts of buildable IT capacity, about three times the 3.2 gigawatts the company operates today. How efficiently that pipeline converts into per-share earnings will define the next phase of the story.
Rent Is Arriving Faster Than Per-Share Profit
The core of this quarter is a gap between two growth rates. Digital Realty’s revenue rose 21% from a year earlier. Its Core FFO per share, which strips out lumpy items such as promote income, rose from $1.89 to $2.10, an increase of about 11%. Adjusted EBITDA grew 13%. The sequential picture is sharper still: revenue climbed 10% from the second quarter on a like-for-like basis, while Core FFO per share slipped from $2.13 to $2.10.
Several mechanisms in data center economics can produce this pattern, and the headline figures do not separate them. New capacity carries operating costs from the day it opens, sometimes before it is fully leased. Building it requires capital, and both debt and new equity weigh on per-share results: interest expense reduces earnings, and new shares spread them more thinly. Across the industry, landlords also commonly bill tenants for electricity at or near cost. That lifts reported revenue without adding much profit, an effect that grows as dense, power-hungry AI and high-performance deployments move in.
The effect is felt differently by different groups. For shareholders, the per-share line is what gets paid out over time, so the revenue headline overstates how much of the growth they capture. For tenants and competitors, the more useful signal is the revenue line itself: demand is commencing at scale, which supports landlords’ pricing across the wholesale market.
$855 Million Signed Is the Next Wave, Not This Quarter’s
Bookings are leases signed but not yet billing. Digital Realty’s third-quarter bookings are expected to generate $855 million of annualized rental revenue at 100% share. That figure counts the full value of deals in joint ventures. At Digital Realty’s own share, the figure is $627 million. As rough arithmetic, $627 million is about 8% of the company’s current annualized revenue run rate of roughly $7.6 billion, added in a single quarter’s signings.
None of that $627 million appears in this quarter’s revenue. It arrives as tenants take occupancy, which in wholesale data centers can mean months or years of construction and fit-out. The 21% revenue growth therefore reflects leases signed in earlier periods that are now commencing. Andy Power’s description of “record leasing” and an “expanding backlog” means the queue behind that revenue grew longer, not shorter.
That is the most direct answer to whether demand is turning into recognized revenue: it is, and the conversion is visible in a 10% sequential jump. But the record quarter sits in the backlog and will show up later, carrying the same cost-of-delivery questions raised by the current per-share figures.
A 9.8-Gigawatt Pipeline Behind 3.2 Gigawatts in Service
Digital Realty reports about 3.2 gigawatts of IT capacity across 311 data centers. IT capacity is the power available to tenants’ computing equipment. The company also reports roughly 9.8 gigawatts of buildable IT capacity under active development or held for future development. The pipeline is about three times the size of the operating portfolio, which gives the company room to keep converting bookings into revenue for years. It also means the cost of delivery, including land, construction, electrical equipment and grid connections, is the variable that matters most for per-share returns.
The company’s structure shows how it shares that burden. Eighty-eight of its 311 data centers are held through unconsolidated entities, typically joint ventures with outside capital partners. That model lets Digital Realty build more than its own balance sheet could fund alone. It also produced the $201 million of promote income in the second quarter, a performance fee earned when a venture beats agreed return targets. Excluding promote from Core FFO is the right lens for recurring earnings, because such fees are real but irregular.
Background
Austin-based Digital Realty describes itself as the world’s largest cloud- and carrier-neutral data center platform. It owns, develops and operates facilities where cloud providers, telecom carriers, financial firms and enterprises lease space, power and interconnection, the direct network links between customers inside a building. It is structured as a real estate investment trust, which is why it reports funds from operations rather than relying on net income alone.
Its business spans two modes: wholesale leasing of large data halls to hyperscale cloud and AI customers, and colocation, where smaller tenants rent cages or racks and connect to one another. Many of its newer developments sit in joint ventures with outside capital partners, letting the company expand faster while sharing construction costs and returns. Source: What Could Digital Realty Trust (NYSE:DLR) Reveal About AI Data Center Demand? (Kalkine Media), a look at Digital Realty’s results as a read on AI data center demand; and Data center operator Digital Realty Trust’s Q3 revenue rises 21%, core FFO up; lifts 2026 outlook (TradingView), a summary of third-quarter results and the raised outlook. Primary sources: Digital Realty Trust Form 8-K filed October 29, 2026; Exhibit 99.1: Digital Realty Reports Third Quarter 2026 Results (earnings press release and supplemental information); Exhibit 99.2: Digital Realty third-quarter 2026 presentation materials.Sources