Equinix Reports Fourth Quarter And Full Year 2017 Results
REDWOOD CITY, Calif., Feb. 14, 2018 /PRNewswire/ --
-- Delivered 2017 annual revenues of $4.4 billion, an increase of 21%
year-over-year; 11% growth on a normalized and constant currency basis
-- Further strengthened reach through M&A activity in Q4 2017 and early Q1
2018, in addition to active pipeline of 30 organic expansions currently
underway
-- Launched next generation of Platform Equinix(®) that will physically
and virtually connect IBX(® )data centers globally, enabling customers
to discover and dynamically connect to any other customer across any
Equinix location
-- Expects to deliver 2018 revenues over $5 billion
Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported quarterly and annual results for the quarter and the year ended December 31, 2017. Equinix uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements.
2017 Results Summary
-- Revenues from continuing operations
-- $4,368 million, a 21% increase over the previous year
-- Includes $359 million of revenues from the acquisition of 29 Verizon
data centers
-- Includes $17 million of revenues from Itconic and Istanbul 2 ("IS2")
acquisitions
-- Operating Income
-- $809 million, a 31% increase over the previous year
-- Adjusted EBITDA
-- $2,052 million, a 47% adjusted EBITDA margin
-- Includes $54 million of integration costs
-- Net Income from Continuing Operations
-- $233 million
-- AFFO
-- $1,437 million, a 33% increase over the previous year
-- Includes $54 million of integration costs
2018 Annual Guidance Summary
-- Revenues from continuing operations
-- >$5,010 million, a 15% increase over the previous year; a normalized
and constant currency increase of 10% excluding Verizon data center
assets
-- Adjusted EBITDA
-- >$2,385 million or a 48% adjusted EBITDA margin
-- Assumes $35 million of integration costs
-- AFFO
-- >$1,635 million, a 14% increase over the previous year
-- Assumes recurring capital expenditures of approximately $200 million
-- Assumes $35 million of integration costs
Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income (loss) from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant.
Quote
Peter Van Camp, Executive Chairman and Interim CEO and President, Equinix:
"In addition to strong financial performance, Equinix achieved a number of significant milestones around interconnection, innovation and acquisitions in 2017 that add even more value to our role as a strategic partner to companies in the execution of their digital business strategies. As we approach our 20th anniversary and reflect on what we've built, we believe our platform will become even more important for our customers in the years to come. We have a clear vision of our strategy and the opportunities ahead, and we are looking forward to another successful year."
Business Highlights
-- Equinix further strengthened the reach of its global platform through
M&A activity in Q4 2017 and early Q1 2018. Today, Equinix announced the
$800 million acquisition of the Infomart Dallas - one of the
most-connected facilities in the U.S. In December, Equinix announced a
$791 million definitive agreement to acquire Australian data center
provider Metronode, which will add 10 data centers and four new metros
(Adelaide, Brisbane, Canberra and Perth) to existing Equinix operations
in Sydney and Melbourne. Upon closing of these acquisitions, Equinix's
percentage of owned assets revenue will surpass 45%, and Platform
Equinix will span 200 International Business Exchange(TM) (IBX(®)) data
centers, 52 markets and 24 countries. Excluding these acquisitions,
Equinix has invested more than $19 billion in capital in building out
the global footprint of Platform Equinix since the company was founded.
-- Equinix also continues to expand the reach of its global platform
through organic expansion, with 30 projects currently underway, half of
which are in the EMEA region. Today, Equinix announced new expansions in
the Culpeper, Houston, London, Paris, São Paulo, Silicon Valley, Sofia
and Washington, D.C. metros totaling more than $500 million of capital
expenditures. The global reach of Equinix continues to attract
companies seeking to locate their infrastructure closer to the digital
edge, and in Q4 2017, customer deployments in all three regions of
Platform Equinix (Americas, EMEA and Asia-Pacific) represented 58% of
total recurring revenues.
-- In Q4, Equinix announced the next phase in the evolution of its global
platform that will set the stage for the future introduction of a series
of coverage, connectivity and service initiatives intended to deliver
increasing value to customers by enabling them to rapidly scale their
digital businesses. As a part of this initiative, Equinix is physically
and virtually connecting its global data center footprint, enabling
customers to discover and dynamically connect to any other customer
across any Equinix location. Services are delivered through Equinix
Cloud Exchange(TM) which is evolving from pure cloud connectivity to a
multi-purpose interconnection exchange and has been renamed Equinix
Cloud Exchange Fabric(TM) (ECX Fabric). In addition to enhancing its
service capabilities, Equinix is also expanding the availability of its
interconnection services to more locations, and in Q4 2017, it announced
the expansion of Equinix Internet Exchange to nine new metros in the
EMEA and Americas regions.
-- Equinix achieved strong growth from enterprise customers in Q4 2017,
with revenues growing twice as fast as any other vertical, as digital
transformation is forcing firms to change how they interconnect users
and clouds across multiple locations. Equinix has now captured 46% of
the Fortune 500, and one-third of the Forbes Global 2000 companies.
Business Outlook
Equinix adopted ASC 606, Revenue from Contracts with Customers ("ASC 606") using the modified retrospective method effective January 1, 2018. The expected impact of adoption is included in the guidance provided. Equinix guidance excludes the anticipated benefit of either the Metronode or the Infomart Dallas acquisitions.
For the first quarter of 2018, Equinix expects revenues to range between $1,204 and $1,212 million, an increase of 1% quarter over quarter at the midpoint, on both an as-reported and a normalized and constant currency basis. This guidance includes a positive foreign currency benefit of $1 million when compared to the average FX rates in Q4 2017, a negative $3 million impact from the adoption of ASC 606 and non-recurring revenues of approximately 5% of total revenues. Cash gross margins are expected to approximate 67%. Cash selling, general and administrative expenses are expected to approximate 21% of revenues. Adjusted EBITDA is expected to range between $549 and $557 million, which includes a less than $1 million positive foreign currency benefit when compared to the average FX rates in Q4 2017, $20 million of seasonally adjusted costs and $15 million of integration costs related to acquisitions. Recurring capital expenditures are expected to be approximately $40 million.
For the full year of 2018, total revenues are expected to exceed $5,010 million, an increase of 15% year over year, or a normalized and constant currency increase of 10% excluding Verizon data center assets. This guidance includes a positive foreign currency benefit of $5 million when compared to prior Equinix guidance rates, $65 million of revenues from the Itconic and IS2 acquisitions, a negative impact of $15 million from the adoption of ASC 606 and non-recurring revenues of approximately 5% of total revenues. Total year cash gross margins are expected to approximate 67%. Cash selling, general and administrative expenses are expected to range between 19% and 20% of revenues. Adjusted EBITDA is expected to exceed $2,385 million, an increase of 16% year over year. This adjusted EBITDA includes a foreign currency benefit of $2 million when compared to prior Equinix guidance rates, $23 million of adjusted EBITDA from the Itconic and IS2 acquisitions and an expected $35 million in integration costs. AFFO is expected to exceed $1,635 million, an increase of 14% year over year. Non-recurring capital expenditures are expected to range between $1,700 and $1,800 million and recurring capital expenditures are expected to approximate $200 million.
The U.S. dollar exchange rates used for 2018 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.15 to the Euro, $1.34 to the Pound, ¥112 to the U.S. dollar, S$1.34 to the U.S. dollar, and R$3.31 to the U.S. dollar. Full year revenue guidance absorbs a negative $54 million from our current foreign currency hedges relative to market rates on December 31, 2017. The Q4 2017 global revenue breakdown by currency for the Euro, Pound, Japanese Yen, Singapore Dollar and Brazilian Real is 19%, 9%, 6%, 5% and 4%, respectively.
The adjusted EBITDA guidance is based on the revenue guidance less our expectations of cash cost of revenues and cash operating expenses. The AFFO guidance is based on the adjusted EBITDA guidance less our expectations of net interest expense, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs, gains (losses) on debt extinguishment, an income tax expense adjustment, recurring capital expenditures and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. As a result of the adoption of ASC 606 on January 1, 2018, Equinix will capitalize the incremental costs of obtaining a contract if the contract's term exceeds one year. The capitalized costs of obtaining contracts are amortized over the estimated life of the service. From Q1 2018, Equinix will include a contract cost adjustment in its AFFO calculation.
Q4 2017 Results Conference Call and Replay Information
Equinix will discuss its quarterly results for the period ended December 31, 2017, along with its future outlook, in its quarterly conference call on Wednesday, February 14, 2018, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live webcast of the call will be available on the Company's Investor Relations website at www.equinix.com/investors. To hear the conference call live, please dial 1-517-308-9482 (domestic and international) and reference the passcode EQIX.
A replay of the call will be available one hour after the call, through Wednesday, May 2, 2018, by dialing 1-203-369-1996 and entering passcode (2018). In addition, the webcast will be available on the company's website at www.equinix.com/investors (no password required).
Investor Presentation and Supplemental Financial Information
Equinix has made available on its website a presentation designed to accompany the discussion of Equinix's results and future outlook, along with certain supplemental financial information and other data. Interested parties may access this information through the Equinix Investor Relations website at www.equinix.com/investors.
Additional Resources
-- Equinix Investor Relations Resources
About Equinix
Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most-interconnected data centers. In 48 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies.
Non-GAAP Financial Measures
Equinix provides all information required in accordance with generally accepted accounting principles ("GAAP"), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Equinix uses non-GAAP financial measures to evaluate its operations.
Equinix provides normalized and constant currency growth rates, which are calculated to adjust for acquisitions, dispositions, integration costs and foreign currency.
Equinix presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents income or loss from continuing operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, acquisition costs and gain or loss on asset sales.
In presenting non-GAAP financial measures, such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), adjusted EBITDA margins, free cash flow and adjusted free cash flow, Equinix excludes certain items that it believes are not good indicators of Equinix's current or future operating performance. These items are depreciation, amortization, accretion of asset retirement obligations and accrued restructuring charges, stock-based compensation, restructuring charges, impairment charges, acquisition costs and gain or loss on asset sales. Equinix excludes these items in order for its lenders, investors and the industry analysts who review and report on Equinix to better evaluate Equinix's operating performance and cash spending levels relative to its industry sector and competitors.
Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of an IBX data center, and do not reflect its current or future cash spending levels to support its business. Its IBX data centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of an IBX data center do not recur with respect to such data center, although Equinix may incur initial construction costs in future periods with respect to additional IBX data centers, and future capital expenditures remain minor relative to the initial investment. This is a trend it expects to continue. In addition, depreciation is also based on the estimated useful lives of the IBX data centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX data centers and are not indicative of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations.
In addition, in presenting the non-GAAP financial measures, Equinix also excludes amortization expense related to acquired intangible assets. Amortization expense is significantly affected by the timing and magnitude of acquisitions and these charges may vary in amount from period to period. We exclude amortization expense to facilitate a more meaningful evaluation of our current operating performance and comparisons to our prior periods. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charges, as these expenses represent costs which Equinix also believes are not meaningful in evaluating Equinix's current operations. Equinix excludes stock-based compensation expense, as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, Equinix and many investors and analysts exclude stock-based compensation expense to compare its operating results with those of other companies. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to Equinix's decision to exit leases for excess space adjacent to several of its IBX data centers, which it did not intend to build out, or its decision to reverse such restructuring charges. Equinix also excludes impairment charges related to certain long-lived assets. The impairment charges are related to expense recognized whenever events or changes in circumstances indicate that the carrying amount of long-lived assets are not recoverable. Equinix also excludes gain or loss on asset sales as it represents profit or loss that is not meaningful in evaluating the current or future operating performance. Finally, Equinix excludes acquisition costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The acquisition costs relate to costs Equinix incurs in connection with business combinations. Such charges generally are not relevant to assessing the long-term performance of Equinix. In addition, the frequency and amount of such charges vary significantly based on the size and timing of the acquisitions. Management believes items such as restructuring charges, impairment charges, acquisition costs and gain or loss on asset sales are non-core transactions; however, these types of costs may occur in future periods.
Equinix also presents funds from operations ("FFO") and adjusted funds from operations ("AFFO"), which are non-GAAP financial measures commonly used in the REIT industry. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income or loss, excluding gain or loss from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. AFFO represents FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition costs, an installation revenue adjustment, a straight-line rent expense adjustment, amortization of deferred financing costs, gain or loss on debt extinguishment, an income tax expense adjustment, recurring capital expenditures, net income or loss from discontinued operations, net of tax and adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items. Equinix excludes depreciation expense, amortization expense, accretion, stock-based compensation, restructuring charges, impairment charges and acquisition costs for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.
Equinix includes an adjustment for revenues from installation fees, since installation fees are deferred and recognized ratably over the expected life of the installation, although the fees are generally paid in a lump sum upon installation. Equinix includes an adjustment for straight-line rent expense on its operating leases, since the total minimum lease payments are recognized ratably over the lease term, although the lease payments generally increase over the lease term. The adjustments for both installation revenues and straight-line rent expense are intended to isolate the cash activity included within the straight-lined or amortized results in the consolidated statement of operations. Equinix excludes the amortization of deferred financing costs as these expenses relate to the initial costs incurred in connection with its debt financings that have no current or future cash obligations. Equinix excludes gain or loss on debt extinguishment since it represents a cost that is not a good indicator of Equinix's current or future operating performance. Equinix includes an income tax expense adjustment, which represents the non-cash tax impact due to changes in valuation allowances and uncertain tax positions that do not relate to the current period's operations. Equinix excludes recurring capital expenditures, which represent expenditures to extend the useful life of its IBX data centers or other assets that are required to support current revenues. Equinix also excludes net income or loss from discontinued operations, net of tax, which represents results that are not a good indicator of our current or future operating performance. From Q1 2018, as a result of the adoption of ASC 606, Equinix will include a contract cost adjustment. Although costs of obtaining contracts are generally incurred and paid during the period of obtaining the contracts, under ASC 606, contract costs are capitalized and amortized over the estimated life of the service. This adjustment to contract costs is intended to isolate the cash activity within the amortized results in the consolidated statement of operations.
Equinix presents constant currency results of operations, which is a non-GAAP financial measure and is not meant to be considered in isolation or as an alternative to GAAP results of operations. However, Equinix has presented this non-GAAP financial measure to provide investors with an additional tool to evaluate its operating results without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Equinix's business performance. To present this information, Equinix's current and comparative prior period revenues and certain operating expenses from entities with functional currencies other than the U.S. dollar are converted into U.S. dollars at a consistent exchange rate for purposes of each result being compared.
Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP. Non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financials measures. Equinix presents such non-GAAP financial measures to provide investors with an additional tool to evaluate its operating results in a manner that focuses on what management believes to be its core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods. Equinix believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze Equinix effectively.
Investors should note that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as those of other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by us to similarly titled non-GAAP financial measures of other companies. Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income or loss from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release, with the exception of including a contract cost adjustment as a result of the adoption of ASC 606 beginning in Q1 2018.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, unanticipated difficulties in closing pending acquisitions; the challenges of acquiring, operating and constructing IBX data centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenues from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; and other risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent Equinix quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
Equinix, IBX and Platform Equinix are registered trademarks of Equinix, Inc. Equinix Cloud Exchange, Equinix Cloud Exchange Fabric and International Business Exchange are trademarks of Equinix, Inc.
EQUINIX, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, 2017 September 30, 2017 December 31, 2016 December 31, 2017 December 31, 2016
----------------- ------------------ ----------------- ----------------- -----------------
Recurring revenues $1,122,599 $1,089,033 $892,442 $4,120,120 $3,417,374
Non-recurring revenues 77,622 63,228 50,205 248,308 194,615
------ ------ ------ ------- -------
Revenues 1,200,221 1,152,261 942,647 4,368,428 3,611,989
Cost of revenues 619,625 582,360 465,921 2,193,149 1,820,870
------- ------- ------- --------- ---------
Gross profit 580,596 569,901 476,726 2,175,279 1,791,119
------- ------- ------- --------- ---------
Operating expenses:
Sales and marketing 153,612 157,619 113,384 581,724 438,742
General and administrative 187,816 185,336 178,956 745,906 694,561
Acquisition costs 7,125 2,083 (440) 38,635 64,195
Impairment charges - - - - 7,698
(Gain) loss on asset sales - - 371 - (32,816)
--- --- --- --- -------
Total operating expenses 348,553 345,038 292,271 1,366,265 1,172,380
------- ------- ------- --------- ---------
Income from continuing
operations 232,043 224,863 184,455 809,014 618,739
------- ------- ------- ------- -------
Interest income 3,255 2,291 948 13,075 3,476
Interest expense (126,144) (121,828) (98,761) (478,698) (392,156)
Other income (expense) 8,668 (1,076) (1,707) 9,213 (57,924)
Loss on debt extinguishment (23,669) (22,156) (1,777) (65,772) (12,276)
------- ------- ------ ------- -------
Total interest and other,
net (137,890) (142,769) (101,297) (522,182) (458,880)
-------- -------- -------- -------- --------
Income from continuing
operations before income
taxes 94,153 82,094 83,158 286,832 159,859
Income tax expense (28,938) (2,194) (19,494) (53,850) (45,451)
------- ------ ------- ------- -------
Net income from continuing
operations 65,215 79,900 63,664 232,982 114,408
Net income (loss) from
discontinued operations,
net of tax - - (1,914) - 12,392
Net income $65,215 $79,900 $61,750 $232,982 $126,800
======= ======= ======= ======== ========
Net income per share:
Basic net income per share
from continuing operations $0.83 $1.02 $0.89 $3.03 $1.63
Basic net income (loss) per
share from discontinued
operations - - (0.03) - 0.18
--- --- ----- --- ----
Basic net income per share $0.83 $1.02 $0.86 $3.03 $1.81
===== ===== ===== ===== =====
Diluted net income per
share from continuing
operations $0.82 $1.02 $0.88 $3.00 $1.62
Diluted net income (loss)
per share from
discontinued operations - - (0.02) - 0.17
Diluted net income per
share $0.82 $1.02 $0.86 $3.00 $1.79
===== ===== ===== ===== =====
Shares used in computing
basic net income per share 78,543 78,055 71,389 76,854 70,117
====== ====== ====== ====== ======
Shares used in computing
diluted net income per
share 79,128 78,719 71,959 77,535 70,816
====== ====== ====== ====== ======
EQUINIX, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30,
2017 2017 December 31, 2016 December 31, 2017 December 31, 2016
------------- -------------- ----------------- ----------------- -----------------
Net income $65,215 $79,900 $61,750 $232,982 $126,800
------- ------- ------- -------- --------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment
("CTA") gain (loss) 45,439 100,909 (292,355) 454,269 (507,420)
Unrealized gain (loss) on available-for-
sale securities 99 245 (133) 14 2,249
Unrealized gain (loss) on cash flow
hedges (2,427) (13,070) 15,762 (54,895) 19,551
Net investment hedge CTA gain (loss) (44,171) (60,723) 41,342 (235,292) 45,505
Net actuarial gain (loss) on defined
benefit plans (182) 13 11 (143) 32
---- --- --- ---- ---
Total other comprehensive income (loss),
net of tax (1,242) 27,374 (235,373) 163,953 (440,083)
------ ------ -------- ------- --------
Comprehensive income (loss), net of tax $63,973 $107,274 $(173,623) $396,935 $(313,283)
======= ======== ========= ======== =========
EQUINIX, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, December 31,
2017 2016
---- ----
Assets
Cash and cash equivalents $1,412,517 $748,476
Short-term investments 28,271 3,409
Accounts receivable, net 576,313 396,245
Other current assets 232,027 319,396
------- -------
Total current assets 2,249,128 1,467,526
Long-term investments 9,243 10,042
Property, plant and equipment, net 9,394,602 7,199,210
Goodwill 4,411,762 2,986,064
Intangible assets, net 2,384,972 719,231
Other assets 246,351 226,298
------- -------
Total assets $18,696,058 $12,608,371
=========== ===========
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $719,257 $581,739
Accrued property, plant and equipment 224,968 144,842
Current portion of capital lease and
other financing obligations 78,705 101,046
Current portion of mortgage and loans
payable 64,491 67,928
Other current liabilities 159,914 133,140
------- -------
Total current liabilities 1,247,335 1,028,695
Capital lease and other financing
obligations, less current portion 1,620,256 1,410,742
Mortgage and loans payable, less current
portion 1,393,118 1,369,087
Senior notes 6,923,849 3,810,770
Other liabilities 661,710 623,248
------- -------
Total liabilities 11,846,268 8,242,542
---------- ---------
Common stock 79 72
Additional paid-in capital 10,121,323 7,413,519
Treasury stock (146,320) (147,559)
Accumulated dividends (2,592,792) (1,969,645)
Accumulated other comprehensive loss (785,189) (949,142)
Retained earnings 252,689 18,584
------- ------
Total stockholders' equity 6,849,790 4,365,829
--------- ---------
Total liabilities and stockholders'
equity $18,696,058 $12,608,371
=========== ===========
Ending headcount by geographic region is as follows:
Americas headcount 3,154 2,510
EMEA headcount 2,560 2,063
Asia-Pacific headcount 1,559 1,420
----- -----
Total headcount 7,273 5,993
===== =====
EQUINIX, INC.
Summary of Debt Principal Outstanding
(in thousands)
(unaudited)
December 31, December 31,
2017 2016
---- ----
Capital
lease
and
other
financing
obligations $1,698,961 $1,511,788
---------- ----------
Term
loans,
net of
debt
discount
and debt
issuance
costs 1,406,686 1,390,771
Mortgage
payable
and
other
loans
payable 50,923 46,244
Plus:
debt
discount
and
issuance
costs,
net 8,615 20,949
----- ------
Total
mortgage
and
loans
payable
principal 1,466,224 1,457,964
--------- ---------
Senior
notes,
net of
debt
issuance
costs 6,923,849 3,810,770
Plus:
debt
issuance
costs 78,151 39,230
------ ------
Total
senior
notes
principal 7,002,000 3,850,000
--------- ---------
Total
debt
principal
outstanding $10,167,185 $6,819,752
=========== ==========
EQUINIX, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, 2017 December 31, 2016 December 31, December 31,
2017 2017 2016
---- ---- ----
Cash flows from operating activities:
Net income $65,215 $79,900 $61,750 $232,982 $126,800
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and accretion 279,774 277,719 212,268 1,028,892 843,510
Stock-based compensation 45,898 45,654 39,837 175,500 155,567
Amortization of debt issuance costs and
debt discounts 4,349 4,390 5,428 24,449 19,137
Loss on debt extinguishment 23,669 22,156 1,777 65,772 12,276
(Gain) loss on asset sales - - 371 - (32,816)
(Gain) loss on sale of discontinued
operations - - 1,891 - (2,351)
Impairment charges - - - - 7,698
Other items (3,439) (744) 5,014 7,972 22,566
Changes in operating assets and
liabilities:
Accounts receivable 40,656 (50,530) (27,423) (161,774) (100,230)
Income taxes, net 18,672 (19,681) 27,999 (34,936) 29,020
Accounts payable and accrued expenses 29,536 28,781 73,091 74,488 61,565
Other assets and liabilities (9,451) 2,865 (101,385) 25,888 (123,389)
-------
Net cash provided by operating
activities 494,879 390,510 300,618 1,439,233 1,019,353
------- ------- ------- --------- ---------
Cash flows from investing activities:
Purchases, sales and maturities of
investments, net 13,554 (28,258) 779 (11,505) 10,839
Business acquisitions, net of cash and
restricted cash acquired (334,754) 1,128 621 (3,963,280) (1,766,606)
Purchases of real estate (30,119) (16,384) - (95,083) (28,118)
Purchases of other property, plant and
equipment (432,677) (320,234) (386,321) (1,378,725) (1,113,365)
Proceeds from asset sales - - 23,385 47,767 851,582
Net cash used in investing activities (783,996) (363,748) (361,536) (5,400,826) (2,045,668)
-------- -------- -------- ---------- ----------
Cash flows from financing activities:
Proceeds from employee equity awards 71 21,506 36 41,696 34,179
Payments of dividend distributions (157,583) (159,541) (125,312) (621,497) (499,463)
Proceeds from public offering of common
stock, net of offering costs 355,080 - - 2,481,421 -
Proceeds from loans payable 997,076 - 457,900 2,056,876 1,168,304
Proceeds from senior notes 1,179,001 1,199,700 - 3,628,701 -
Repayments of capital lease and other
financing obligations (33,218) (15,792) (13,522) (93,470) (114,385)
Repayments of mortgage and loans payable
and convertible debt (2,214,278) (21,215) (476,474) (2,277,798) (1,462,939)
Repayment of senior notes - (500,000) - (500,000) -
Debt extinguishment costs (3,102) (11,766) (1,199) (26,122) (11,380)
Debt issuance costs (24,161) (16,267) 370 (81,047) (11,381)
Other financing activities - - - (900) -
---
Net cash provided by (used in)
financing activities 98,886 496,625 (158,201) 4,607,860 (897,065)
------ ------- -------- --------- --------
Effect of foreign currency exchange
rates on cash, cash equivalents and
restricted cash 4,737 9,582 (34,930) 31,187 (21,800)
Change in cash balances included in
assets held for sale - - 3,755 - -
--- --- ----- --- ---
Net increase (decrease) in cash, cash
equivalents and restricted cash (185,494) 532,969 (250,294) 677,454 (1,945,180)
Cash, cash equivalents and restricted
cash at beginning of period 1,636,195 1,103,226 1,023,541 773,247 2,718,427
Cash, cash equivalents and restricted
cash at end of period $1,450,701 $1,636,195 $773,247 $1,450,701 $773,247
========== ========== ======== ========== ========
Supplemental cash flow information:
Cash paid for taxes $10,230 $16,590 $7,817 $72,641 $39,320
======= ======= ====== ======= =======
Cash paid for interest $102,385 $129,014 $78,553 $444,793 $350,083
======== ======== ======= ======== ========
Free cash flow (negative free cash
flow) (1) $(302,671) $55,020 $(61,697) $(3,950,088) $(1,037,154)
========= ======= ======== =========== ===========
Adjusted free cash flow (adjusted
negative free cash flow) (2) $62,202 $70,276 $(62,318) $108,275 $757,570
======= ======= ======== ======== ========
(1) We define free cash flow as net cash provided by operating activities plus net cash used in investing activities (excluding
any net purchases, sales and maturities of investments) as presented below:
Net cash provided by operating activities
as presented above $494,879 $390,510 $300,618 $1,439,233 $1,019,353
Net cash used in investing activities as
presented above (783,996) (363,748) (361,536) (5,400,826) (2,045,668)
Purchases, sales and maturities of
investments, net (13,554) 28,258 (779) 11,505 (10,839)
Free cash flow (negative free cash flow) $(302,671) $55,020 $(61,697) $(3,950,088) $(1,037,154)
===
(2) We define adjusted free cash flow as free cash flow (as defined above) excluding any purchases of real estate and business
acquisitions, net of cash and restricted cash acquired as presented below:
Free cash flow (as defined above) $(302,671) $55,020 $(61,697) $(3,950,088) $(1,037,154)
Less business acquisitions, net of cash
and restricted cash acquired 334,754 (1,128) (621) 3,963,280 1,766,606
Less purchases of real estate 30,119 16,384 - 95,083 28,118
Adjusted free cash flow (adjusted negative
free cash flow) $62,202 $70,276 $(62,318) $108,275 $757,570
===
EQUINIX, INC.
Non-GAAP Measures and Other Supplemental Data
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, 2016 December 31, December 31,
2017 2017 2017 2016
---- ---- ---- ----
Recurring revenues $1,122,599 $1,089,033 $892,442 $4,120,120 $3,417,374
Non-recurring revenues 77,622 63,228 50,205 248,308 194,615
------
Revenues (1) 1,200,221 1,152,261 942,647 4,368,428 3,611,989
---------
Cash cost of revenues (2) 407,389 377,767 301,540 1,433,165 1,169,494
-------
Cash gross profit (3) 792,832 774,494 641,107 2,935,263 2,442,495
-------
Cash operating expenses (4):
Cash sales and marketing expenses (5) 94,273 96,873 85,196 380,623 322,474
Cash general and administrative 133,719 127,302 119,420 502,599 462,547
expenses (6)
---
Total cash operating expenses (7) 227,992 224,175 204,616 883,222 785,021
-------
Adjusted EBITDA (8) $564,840 $550,319 $436,491 $2,052,041 $1,657,474
===
Cash gross margins (9) 66% 67% 68% 67% 68%
=== === === === === ===
Adjusted EBITDA 47% 48% 46% 47% 46%
margins (10)
===
Adjusted EBITDA flow-through rate (11) 30% 48% 92% 52% 44%
=== === === === === ===
FFO (12) $285,618 $286,119 $219,868 $992,363 $725,089
===
AFFO (13) (14) $381,527 $391,289 $293,785 $1,437,040 $1,078,339
===
(1) The geographic split of our revenues on a services basis is presented below:
Americas Revenues:
Colocation $422,648 $422,244 $299,200 $1,518,929 $1,161,665
Interconnection 127,793 124,377 100,459 469,268 374,655
Managed infrastructure 18,512 18,359 14,385 68,937 53,404
Other 1,340 1,056 943 5,218 3,360
-----
Recurring revenues 570,293 566,036 414,987 2,062,352 1,593,084
Non-recurring revenues 35,874 30,502 21,555 110,408 86,465
------
Revenues $606,167 $596,538 $436,542 $2,172,760 $1,679,549
===
EMEA Revenues:
Colocation $282,240 $268,365 $242,829 $1,063,543 $941,848
Interconnection 31,311 27,574 22,280 104,891 85,869
Managed infrastructure 28,780 22,465 17,243 88,122 67,553
Other 2,573 2,475 2,919 10,415 11,382
-----
Recurring revenues 344,904 320,879 285,271 1,266,971 1,106,652
Non-recurring revenues 24,728 17,954 16,353 79,285 64,687
------
Revenues $369,632 $338,833 $301,624 $1,346,256 $1,171,339
===
Asia-Pacific Revenues:
Colocation $156,824 $152,071 $146,483 $595,673 $543,581
Interconnection 28,781 27,593 23,159 107,014 82,521
Managed infrastructure 21,797 22,454 22,362 88,110 89,335
Other - - 180 - 2,201
---
Recurring revenues 207,402 202,118 192,184 790,797 717,638
Non-recurring revenues 17,020 14,772 12,297 58,615 43,463
------
Revenues $224,422 $216,890 $204,481 $849,412 $761,101
===
Worldwide Revenues:
Colocation $861,712 $842,680 $688,512 $3,178,145 $2,647,094
Interconnection 187,885 179,544 145,898 681,173 543,045
Managed infrastructure 69,089 63,278 53,990 245,169 210,292
Other 3,913 3,531 4,042 15,633 16,943
-----
Recurring revenues 1,122,599 1,089,033 892,442 4,120,120 3,417,374
Non-recurring revenues 77,622 63,228 50,205 248,308 194,615
Revenues $1,200,221 $1,152,261 $942,647 $4,368,428 $3,611,989
===
(2) We define cash cost of revenues as cost of revenues less depreciation, amortization, accretion and stock-based compensation as
presented below:
Cost of revenues $619,625 $582,360 $465,921 $2,193,149 $1,820,870
Depreciation, amortization and accretion
expense (208,615) (200,682) (161,049) (746,363) (638,290)
Stock-based compensation expense (3,621) (3,911) (3,332) (13,621) (13,086)
-------
Cash cost of revenues $407,389 $377,767 $301,540 $1,433,165 $1,169,494
===
The geographic split of our cash cost of revenues is presented below:
Americas cash cost of revenues $179,884 $168,901 $115,838 $610,433 $449,088
EMEA cash cost of revenues 148,721 133,137 113,796 528,518 446,842
Asia-Pacific cash cost of revenues 78,784 75,729 71,906 294,214 273,564
Cash cost of revenues $407,389 $377,767 $301,540 $1,433,165 $1,169,494
===
(3) We define cash gross profit as revenues less cash cost of revenues (as defined above).
(4) We define cash operating expense as selling, general, and administrative expense less depreciation, amortization, and stock-
based compensation. We also refer to cash operating expense as cash selling, general and administrative expense or "cash SG&A".
Selling, general, and administrative expense $341,428 $342,955 $292,340 $1,327,630 $1,133,303
Depreciation and amortization expense (71,159) (77,037) (51,219) (282,529) (205,220)
Stock-based compensation expense (42,277) (41,743) (36,505) (161,879) (143,062)
--------
Cash operating expense $227,992 $224,175 $204,616 $883,222 $785,021
===
(5) We define cash sales and marketing expense as sales and marketing expense less depreciation, amortization and stock-based
compensation as presented below:
Sales and marketing expense $153,612 $157,619 $113,384 $581,724 $438,742
Depreciation and amortization expense (47,490) (46,899) (17,345) (151,007) (73,238)
Stock-based compensation expense (11,849) (13,847) (10,843) (50,094) (43,030)
--------
Cash sales and marketing expense $94,273 $96,873 $85,196 $380,623 $322,474
===
(6) We define cash general and administrative expense as general and administrative expense less depreciation, amortization and
stock-based compensation as presented below:
General and administrative expense $187,816 $185,336 $178,956 $745,906 $694,561
Depreciation and amortization expense (23,669) (30,138) (33,874) (131,522) (131,982)
Stock-based compensation expense (30,428) (27,896) (25,662) (111,785) (100,032)
--------
Cash general and administrative expense $133,719 $127,302 $119,420 $502,599 $462,547
===
(7) The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below:
Americas cash SG&A $140,460 $135,536 $115,012 $527,633 $443,150
EMEA cash SG&A 55,854 59,232 59,977 235,041 230,234
Asia-Pacific cash SG&A 31,678 29,407 29,627 120,548 111,637
------
Cash SG&A $227,992 $224,175 $204,616 $883,222 $785,021
===
(8) We define adjusted EBITDA as income from continuing operations excluding depreciation, amortization, accretion, stock-based
compensation, restructuring charges, impairment charges, acquisition costs and gain or loss on asset sales as presented below:
Income from continuing operations $232,043 $224,863 $184,455 $809,014 $618,739
Depreciation, amortization and accretion
expense 279,774 277,719 212,268 1,028,892 843,510
Stock-based compensation expense 45,898 45,654 39,837 175,500 156,148
Impairment charges - - - - 7,698
Acquisition costs 7,125 2,083 (440) 38,635 64,195
(Gain) loss on asset sales - - 371 - (32,816)
---
Adjusted EBITDA $564,840 $550,319 $436,491 $2,052,041 $1,657,474
===
The geographic split of our adjusted EBITDA is presented below:
Americas income from continuing operations $101,286 $105,785 $87,537 $363,220 $352,180
Americas depreciation, amortization and
accretion expense 149,970 151,665 83,305 514,968 321,103
Americas stock-based compensation expense 33,455 33,419 28,312 128,419 109,740
Americas acquisition costs 1,112 1,232 6,538 28,087 9,530
Americas gain on asset sales - - - - (5,242)
---
Americas adjusted EBITDA $285,823 $292,101 $205,692 $1,034,694 $787,311
===
EMEA income from continuing operations $73,749 $64,197 $51,347 $237,854 $124,853
EMEA depreciation, amortization and
accretion expense 79,741 74,625 76,598 309,290 314,570
EMEA stock-based compensation expense 6,874 6,791 6,884 26,325 28,317
EMEA acquisition costs 4,693 851 (6,978) 9,228 54,468
EMEA gain on asset sales - - - - (27,945)
---
EMEA adjusted EBITDA $165,057 $146,464 $127,851 $582,697 $494,263
===
Asia-Pacific income from continuing
operations $57,008 $54,881 $45,571 $207,940 $141,706
Asia-Pacific depreciation, amortization and
accretion expense 50,063 51,429 52,365 204,634 207,837
Asia-Pacific stock-based compensation
expense 5,569 5,444 4,641 20,756 18,091
Asia-Pacific impairment charges - - - - 7,698
Asia-Pacific acquisition costs 1,320 - - 1,320 197
Asia-Pacific loss on asset sales - - 371 - 371
---
Asia-Pacific adjusted EBITDA $113,960 $111,754 $102,948 $434,650 $375,900
===
(9) We define cash gross margins as cash gross profit divided by revenues.
Our cash gross margins by geographic region is presented below:
Americas cash gross margins 70% 72% 73% 72% 73%
=== === === === === ===
EMEA cash gross margins 60% 61% 62% 61% 62%
=== === === === === ===
Asia-Pacific cash gross margins 65% 65% 65% 65% 64%
=== === === === === ===
(10) We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA margins 47% 49% 47% 48% 47%
=== === === === === ===
EMEA adjusted EBITDA margins 45% 43% 42% 43% 42%
=== === === === === ===
Asia-Pacific adjusted EBITDA margins 51% 52% 50% 51% 49%
=== === === === === ===
(11) We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as
follows:
Adjusted EBITDA - current period $564,840 $550,319 $436,491 $2,052,041 $1,657,474
Less adjusted EBITDA - prior period (550,319) (509,308) (420,042) (1,657,474) (1,271,627)
---------
Adjusted EBITDA growth $14,521 $41,011 $16,449 $394,567 $385,847
===
Revenues - current period $1,200,221 $1,152,261 $942,647 $4,368,428 $3,611,989
Less revenues - prior period (1,152,261) (1,066,421) (924,676) (3,611,989) (2,725,867)
-----------
Revenue growth $47,960 $85,840 $17,971 $756,439 $886,122
===
Adjusted EBITDA flow-through rate 30% 48% 92% 52% 44%
=== === === === === ===
(12) FFO is defined as net income or loss, excluding gain or loss from the disposition of real estate assets, depreciation and
amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of
these items.
Net income $65,215 $79,900 $61,750 $232,982 $126,800
Adjustments:
Real estate depreciation 219,237 200,313 157,054 754,351 626,564
(Gain) loss on disposition of real estate
property 1,166 5,877 1,036 4,945 (28,388)
Adjustments for FFO from unconsolidated
joint ventures - 29 28 85 113
---
FFO $285,618 $286,119 $219,868 $992,363 $725,089
===
(13) AFFO is defined as FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based
compensation, restructuring charges, impairment charges, acquisition costs, an installation revenue adjustment, a straight-line
rent expense adjustment, amortization of deferred financing costs, gain or loss on debt extinguishment, an income tax expense
adjustment, net income or loss from discontinued operations, net of tax, recurring capital expenditures and adjustments from FFO
to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items.
FFO $285,618 $286,119 $219,868 $992,363 $725,089
Adjustments:
Installation revenue adjustment 6,721 6,161 4,788 24,496 20,161
Straight-line rent expense adjustment 3,204 2,297 1,986 8,925 7,700
Amortization of deferred financing costs 4,349 4,390 5,258 24,449 18,696
Stock-based compensation expense 45,898 45,654 39,837 175,500 156,149
Non-real estate depreciation expense 24,100 29,205 23,265 111,121 87,781
Amortization expense 48,940 48,893 29,478 177,008 122,862
Accretion expense (adjustment) (12,503) (692) 2,471 (13,588) 6,303
Recurring capital expenditures (62,540) (44,914) (36,476) (167,995) (141,819)
Loss on debt extinguishment 23,669 22,156 1,777 65,772 12,276
Acquisition costs 7,125 2,083 (440) 38,635 64,195
Impairment charges - - - - 7,698
Income tax expense adjustment 6,946 (10,058) 68 371 3,680
Net (income) loss from discontinued
operations, net of tax - - 1,914 - (12,392)
Adjustments for AFFO from unconsolidated
joint ventures - (5) (9) (17) (40)
---
AFFO $381,527 $391,289 $293,785 $1,437,040 $1,078,339
===
(14) Following is how we reconcile from adjusted EBITDA to AFFO:
Adjusted EBITDA $564,840 $550,319 $436,491 $2,052,041 $1,657,474
Adjustments:
Interest expense, net of interest income (122,889) (119,537) (97,813) (465,623) (388,679)
Amortization of deferred financing costs 4,349 4,390 5,258 24,449 18,696
Income tax expense (28,938) (2,194) (19,494) (53,850) (45,451)
Income tax expense adjustment 6,946 (10,058) 68 371 3,680
Straight-line rent expense adjustment 3,204 2,297 1,986 8,925 7,700
Installation revenue adjustment 6,721 6,161 4,788 24,496 20,161
Recurring capital expenditures (62,540) (44,914) (36,476) (167,995) (141,819)
Other income (expense) 8,668 (1,076) (1,707) 9,213 (57,924)
(Gain) loss on disposition of real estate
property 1,166 5,877 1,036 4,945 (28,388)
Adjustments for unconsolidated JVs' and non-
controlling interests - 24 19 68 73
Adjustment for gain (loss) on sale of asset - - (371) - 32,816
---
AFFO $381,527 $391,289 $293,785 $1,437,040 $1,078,339
===
View original content with multimedia:http://www.prnewswire.com/news-releases/equinix-reports-fourth-quarter-and-full-year-2017-results-300598956.html
SOURCE Equinix, Inc.
