Equinix Reports Fourth Quarter And Full Year 2019 Results
REDWOOD CITY, Calif., Feb. 12, 2020 /PRNewswire/ --
-- Delivered 2019 annual revenues increase of 10% year-over-year to $5.562
billion. This reflects a 9% year-over-year increase on a normalized and
constant currency basis
-- Named a leader in the first-ever IDC MarketScape report for Worldwide
Colocation and Interconnection Services
-- Customer deployments across multiple metros increased to 87% of total
recurring revenues, demonstrating the value of the Equinix global
platform
-- Appointed Adaire Fox-Martin to Board of Directors
Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported results for the quarter and year ended December 31, 2019. 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. All per share results are presented on a fully diluted basis.
2019 Results Summary
-- Revenues
-- $5.562 billion, a 10% increase over the previous year or a
normalized and constant currency increase of 9%
-- Operating Income
-- $1.170 billion, a 20% increase over the previous year, and an
operating margin of 21%
-- Adjusted EBITDA
-- $2.688 billion, a 48% adjusted EBITDA margin
-- Includes $9 million of integration costs
-- Net Income and Net Income per Share attributable to Equinix
-- $507 million, a 39% increase over the previous year
-- $5.99 per share, a 31% increase over the previous year
-- AFFO and AFFO per Share
-- $1.931 billion, a 16% increase over the previous year or 13% on a
normalized and constant currency basis
-- $22.81 per share, a 10% increase over the previous year or 8% on a
normalized and constant currency basis
-- Includes $9 million of integration costs
2020 Annual Guidance Summary
-- Revenues
-- $6.000 - $6.050 billion, an 8 - 9% increase over the previous year,
both on an as-reported and normalized and constant currency basis
-- Adjusted EBITDA
-- $2.858 - $2.908 billion, a 48% adjusted EBITDA margin
-- Assumes $10 million of integration costs
-- AFFO and AFFO per Share
-- $2.108 - $2.158 billion, an increase of 9 - 12% over the previous
year or a normalized and constant currency increase of 11 - 14%
-- $24.42 - $25.00 per share, an increase of 7 - 10% over the previous
year or a normalized and constant currency increase of 9 - 11%
-- Assumes $10 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
Charles Meyers, President and CEO, Equinix:
"2019 was a great year for Equinix, delivering $5.6 billion of revenue, ahead of our expectations, as we continue to drive value on both the top-line and at the per-share level. The pace of digital transformation continues to accelerate, creating seismic shifts across industries as businesses embrace interconnection as critical to their infrastructure strategy, and adopt hybrid and multicloud as the clear architecture of choice. In 2020, we will continue our focus on evolving Platform Equinix, adding new capabilities and service offerings to meet the digital transformation needs of our customers, expanding our global reach and scaling our go-to-market engine to execute on the opportunity ahead. We are excited about the year ahead and continuing to build a company that is simultaneously driving great business results and positively impacting our world."
Business Highlights
-- Equinix continues to progress its vision to evolve Platform Equinix(®)
into a global platform that interconnects and integrates global
businesses at the digital edge. On January 14, 2020, Equinix announced
it signed a definitive agreement to acquire Packet, the leading bare
metal automation platform. Equinix intends to leverage the Packet
offering to accelerate the development and delivery of its
interconnected edge services. By integrating Packet's innovative and
developer-oriented bare metal service offering, Equinix intends to
create a world-class, enterprise-grade bare metal offering that will
allow customers to rapidly deploy digital infrastructure, within
minutes, at global scale.
-- In January, Equinix was named a leader in IDC's first-ever assessment of
the colocation and interconnection services vendor market using the IDC
MarketScape model. The IDC MarketScape report for Worldwide Colocation
and Interconnection Services 2019-2020 vendor assessment (doc
#US4517419, December 2019) is a key milestone in the evolution of the
data center and networking industry, as it reflects the demand for
colocation and interconnection. The recognition of Equinix as a leader
in this report underscores the value of Platform Equinix and highlights
the competitive advantages that Equinix has over its competitors.
-- Equinix continued to expand the reach of its global platform and
currently operates across 55 metros in 26 countries including the
recently completed acquisition of three Axtel data centers that serve
two new strategic technology metros in Mexico. And, the company plans to
build out new markets in Hamburg and Muscat this year. The benefit of
this unparalleled reach is reflected in strong cross-regional activity
with customer deployments across multiple metros increasing to 87% of
total recurring revenues.
-- Interconnection revenues grew 13% year-over-year on an as-reported basis
and 14% on a normalized and constant currency basis, driven by strong
customer response to Equinix Cloud Exchange Fabric(TM) (ECX Fabric(TM)),
good traction in new internet exchange markets, and solid
interconnection net adds. Today, Equinix has the most comprehensive
global interconnection platform, now comprising over 363,000 physical
and virtual interconnections. The company delivered its twelfth
consecutive quarter of adding more interconnections than the rest of its
top 10 competitors combined. In Q4, Equinix added an incremental 7,400
interconnections, fueled by high gross adds from new streaming services,
expanding inter-metro connections, and seasonably lower churn. Peak
internet exchange traffic grew by 10% this quarter, helped by new OTT
video offerings.
-- Equinix achieved its second best gross and net bookings this quarter
with strong performance across all three regions (Americas, EMEA and
Asia-Pacific) and notable momentum in Asia-Pacific. In 2019, Equinix
closed over 17,000 deals, demonstrating the tremendous scale of the
company's go-to-market engine and the differentiated nature of the
Equinix value proposition. In Q4, Equinix achieved a record number of
new wins across multiple verticals. The content and digital media
vertical experienced record bookings led by Asia-Pacific and strength in
the gaming, publishing and eCommerce sectors as digital transformation
continues to shape this vertical. The financial services vertical
achieved its third highest bookings led by capital markets providers and
multinational financials as cloud adoption accelerates.
-- Equinix continues to make significant progress with the company's
hyperscale strategy with six announced projects underway across all
three regions and a strong pipeline of customer demand. In Q4, Equinix
announced the completion of the formation of the greater than US$1.0
billion joint venture in the form of a limited liability partnership
with GIC, Singapore's sovereign wealth fund, to develop and operate
xScale((TM) )data centers in Europe. Equinix is advancing additional
joint venture conversations in Japan and other targeted geographies.
-- Equinix's financial strength remains a significant and strategic
advantage. Equinix leveraged the company's newly achieved
investment-grade rating to reduce its interest burden as demonstrated by
raising $2.8 billion in debt during Q4 to refinance a portion of the
company's outstanding high-yield debt at more favorable rates.
Business Outlook
For the first quarter of 2020, Equinix expects revenues to range between $1.450 and $1.460 billion, an increase of 3% quarter-over-quarter at the midpoint or 2% on a normalized and constant currency basis. This guidance includes a foreign currency benefit of $4 million when compared to the average FX rates in Q4 2019 and $5 million in revenues from the Axtel acquisition. Adjusted EBITDA is expected to range between $686 and $696 million, which includes a $2 million foreign currency benefit when compared to the average FX rates in Q4 2019. Adjusted EBITDA includes $4 million of integration costs related to acquisitions. Recurring capital expenditures are expected to range between $19 and $29 million.
For the full year of 2020, total revenues are expected to range between $6.000 and $6.050 billion, an 8 - 9% increase over the previous year, on both an as-reported and normalized and constant currency basis. This guidance includes a negative foreign currency impact of $12 million when compared to the average FX rates in 2019 and $18 - $22 million in revenues from the Axtel acquisition. Adjusted EBITDA is expected to range between $2.858 and $2.908 billion, an adjusted EBITDA margin of 48%. This adjusted EBITDA includes a negative foreign currency impact of $8 million when compared to the average FX rates in 2019, higher utilities and property tax expenses and strategic investments in Go-to-Market and Product initiatives. For the year, the company expects to incur $10 million in integration costs related to acquisitions. AFFO is expected to range between $2.108 and $2.158 billion, an increase of 9 - 12% over the previous year, or a normalized and constant currency increase of 11 - 14%. This AFFO guidance includes $10 million in integration costs related to acquisitions. AFFO per share is expected to range between $24.42 and $25.00, an increase of 9 - 11% over the previous year, on a normalized and constant currency basis. Non-recurring capital expenditures are expected to range between $1.880 and $2.070 billion and recurring capital expenditures are expected to range between $170 and $180 million.
The U.S. dollar exchange rates used for 2020 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.15 to the Euro, $1.32 to the Pound, S$1.34 to the U.S. dollar, ¥109 to the U.S. dollar and R$4.02 to the U.S. dollar. The Q4 2019 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 20%, 9%, 7%, 6% and 3%, 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 and debt discounts and premiums, income tax expense, an income tax expense adjustment, recurring capital expenditures, other income (expense), (gains) losses on disposition of real estate property and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items.
Q4 2019 Results Conference Call and Replay Information
Equinix will discuss its quarterly results for the period ended December 31, 2019, along with its future outlook, in its quarterly conference call on Wednesday, February 12, 2020, 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 6, 2020, by dialing 1-203-369-3370 and entering passcode (2020). 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. On this global platform for digital business, companies come together across more than 50 markets on five continents to reach everywhere, interconnect everyone and integrate everything they need to create their digital futures.
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, changes in accounting principles and foreign currency.
Equinix presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents income or loss from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction 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, transaction 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 transaction costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The transaction costs relate to costs Equinix incurs in connection with business combinations and formation of joint ventures, including advisory, legal, accounting, valuation and other professional or consulting fees. 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 transactions. Management believes items such as restructuring charges, impairment charges, transaction 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"), both commonly used in the REIT industry, as supplemental performance measures. 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, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, 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 transaction 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 period of contract term, 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. Equinix also includes an adjustment to contract costs incurred to obtain contracts, since contract costs are capitalized and amortized over the estimated period of benefit on a straight-line basis, although costs of obtaining contracts are generally incurred and paid during the period of obtaining the contracts. The adjustments for installation revenues, straight-line rent expense and contract costs 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 and debt discounts and premiums 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.
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 financial 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.
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, the challenges of acquiring, operating and constructing IBX data centers and developing, deploying and delivering Equinix products and solutions; 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; risks related to our taxation as a REIT; 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, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2019 2019 2018 2019 2018
---
Recurring revenues $
1,337,977 $
1,319,336 $
1,230,318 $
5,238,186 $
4,776,502
Non-recurring revenues 79,158 77,474 79,765 323,954 295,152
Revenues 1,417,135 1,396,810 1,310,083 5,562,140 5,071,654
Cost of revenues 725,636 704,339 670,935 2,810,184 2,605,475
Gross profit 691,499 692,471 639,148 2,751,956 2,466,179
Operating expenses:
Sales and marketing 160,556 161,574 161,804 651,046 633,702
General and administrative 245,504 241,812 206,146 935,018 826,694
Transaction costs 16,545 2,991 481 24,781 34,413
Impairment charges (233) 1,189 15,790
Gain on asset sales (43,847) (463) (44,310) (6,013)
Total operating expenses 378,525 407,103 368,431 1,582,325 1,488,796
Income from operations 312,974 285,368 270,717 1,169,631 977,383
Interest and other income (expense):
Interest income 7,532 8,201 3,002 27,697 14,482
Interest expense (117,617) (118,674) (129,978) (479,684) (521,494)
Other income 12,336 3,428 4,498 27,778 14,044
Gain (loss) on debt
extinguishment (52,758) 315 (12,163) (52,825) (51,377)
Total interest and other,
net (150,507) (106,730) (134,641) (477,034) (544,345)
Income before income taxes 162,467 178,638 136,076 692,597 433,038
Income tax expense (37,632) (57,827) (26,054) (185,352) (67,679)
Net income 124,835 120,811 110,022 507,245 365,359
Net loss attributable to
non-controlling interests 160 39 205
Net income attributable to
Equinix $
124,995 $
120,850 $
110,022 $
507,450 $
365,359
Net income per share attributable to Equinix:
Basic net income per share $
1.47 $
1.42 $
1.37 $
6.03 $
4.58
Diluted net income per
share $
1.46 $
1.41 $
1.36 $
5.99 $
4.56
Shares used in computing
basic net income per share 85,289 85,012 80,509 84,140 79,779
Shares used in computing
diluted net income per
share 85,831 85,571 80,740 84,679 80,197
EQUINIX, INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2019 2019 2018 2019 2018
---
Net income $
124,835 $
120,811 $
110,022 $
507,245 $
365,359
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment
("CTA") gain (loss) 283,185 (284,927) (68,795) (58,334) (421,743)
Unrealized gain (loss) on cash flow
hedges (22,928) 14,217 6,287 (3,842) 43,671
Net investment hedge CTA gain (loss) (154,596) 188,897 38,934 73,294 219,628
Net actuarial gain (loss) on defined
benefit plans (22) (8) 20 (48) 55
Total other comprehensive income (loss),
net of tax 105,639 (81,821) (23,554) 11,070 (158,389)
Comprehensive income, net of tax 230,474 38,990 86,468 518,315 206,970
Net loss attributable to non-controlling
interests 160 39 205
Other comprehensive (income) loss
attributable to non-controlling
interests (16) 28 19
Comprehensive income attributable to
Equinix $
230,618 $
39,057 $
86,468 $
518,539 $
206,970
EQUINIX, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, 2019 December 31, 2018
---
Assets
Cash and cash equivalents $
1,869,577 $
606,166
Short-term investments 10,362 4,540
Accounts receivable, net 689,134 630,119
Other current assets 303,543 274,857
Total current assets 2,872,616 1,515,682
Property, plant and equipment, net 12,152,597 11,026,020
Operating lease right-of-use assets 1,475,367
Goodwill 4,781,858 4,836,388
Intangible assets, net 2,102,389 2,333,296
Other assets 580,788 533,252
Total assets $
23,965,615 $
20,244,638
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $
760,718 $
756,692
Accrued property, plant and equipment 301,535 179,412
Current portion of operating lease
liabilities 145,606
Current portion of finance lease
liabilities 75,239 77,844
Current portion of mortgage and loans
payable 77,603 73,129
Current portion of senior notes 643,224 300,999
Other current liabilities 153,938 126,995
Total current liabilities 2,157,863 1,515,071
Operating lease liabilities, less current
portion 1,315,656
Finance lease liabilities, less current
portion 1,430,882 1,441,077
Mortgage and loans payable, less current
portion 1,289,434 1,310,663
Senior notes, less current portion 8,309,673 8,128,785
Other liabilities 621,725 629,763
Total liabilities 15,125,233 13,025,359
Common stock 86 81
Additional paid-in capital 12,696,433 10,751,313
Treasury stock (144,256) (145,161)
Accumulated dividends (4,168,469) (3,331,200)
Accumulated other comprehensive loss (934,613) (945,702)
Retained earnings 1,391,425 889,948
Total Equinix stockholders' equity 8,840,606 7,219,279
Non-controlling interests (224)
Total stockholders' equity 8,840,382 7,219,279
Total liabilities and stockholders'
equity $
23,965,615 $
20,244,638
Ending headcount by geographic region is as follows:
Americas headcount 3,672 3,480
EMEA headcount 2,941 2,751
Asia-Pacific headcount 1,765 1,672
Total headcount 8,378 7,903
EQUINIX, INC.
Summary of Debt Principal Outstanding
(in thousands)
(unaudited)
December 31, 2019 December 31, 2018
---
Finance lease liabilities $
1,506,121 $
1,518,921
Term loans 1,282,302 1,337,868
Mortgage payable and
other loans payable 84,735 45,924
Plus: debt discount and
issuance costs, net 3,081 4,732
Total mortgage and loans
payable principal 1,370,118 1,388,524
Senior notes 8,952,897 8,429,784
Plus: debt issuance costs 78,030 75,372
Less: debt premium (1,716) (5,031)
Total senior notes
principal 9,029,211 8,500,125
Total debt principal
outstanding $
11,905,450 $
11,407,570
EQUINIX, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2019 2019 2018 2019 2018
Cash flows from operating activities:
Net income $
124,835 $
120,811 $
110,022 $
507,245 $
365,359
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 328,295 321,746 305,130 1,285,296 1,226,741
Stock-based compensation 62,126 63,871 40,867 236,539 180,716
Amortization of debt issuance costs and
debt discounts and premiums 3,613 3,196 3,009 13,042 13,618
(Gain) loss on debt extinguishment 52,758 (315) 12,163 52,825 51,377
Gain on asset sales (43,847) (463) (44,310) (6,013)
Impairment charges (233) 1,189 15,790
Other items 3,831 2,820 10,704 19,620 27,644
Changes in operating assets and liabilities:
Accounts receivable 96,480 3,331 32,195 (26,909) (52,931)
Income taxes, net (40,649) 42,482 22,206 32,495 (10,670)
Accounts payable and accrued expenses (34,588) 10,647 30,713 (27,928) 35,495
Operating lease right-of-use assets 40,805 29,743 149,031
Operating lease liabilities (40,032) (38,254) (152,091)
Other assets and liabilities (23,724) (61,810) (8,380) (67,917) (15,910)
Net cash provided by operating
activities 529,670 498,994 558,629 1,992,728 1,815,426
Cash flows from investing activities:
Purchases, sales and maturities of
investments, net (5,776) (2,905) 1,402 (20,523) 20,597
Business acquisitions, net of cash and
restricted cash acquired (502) (34,143) (829,687)
Purchases of real estate (104,865) (16,852) (45,806) (169,153) (182,418)
Purchases of other property, plant and
equipment (714,561) (556,822) (680,665) (2,079,521) (2,096,174)
Proceeds from asset sales 358,656 117 358,773 12,154
Net cash used in investing activities (466,546) (576,462) (725,571) (1,944,567) (3,075,528)
Cash flows from financing activities:
Proceeds from employee equity awards 24,425 33 52,018 50,136
Payment of dividend distributions (210,360) (212,752) (183,858) (836,164) (738,600)
Proceeds from public offering of common
stock, net of offering costs 99,421 114,299 1,660,976 388,172
Proceeds from loans payable 424,650
Proceeds from senior notes, net of debt
discounts 2,797,906 2,797,906 929,850
Repayment of finance lease liabilities (63,701) (19,673) (14,119) (126,486) (103,774)
Repayment of mortgage and loans payable (19,431) (17,584) (17,975) (73,227) (447,473)
Repayment of senior notes (2,056,289) (2,206,289)
Debt extinguishment costs (43,311) (43,311) (20,556)
Debt issuance costs (23,341) (23,341) (12,218)
Other financing activities 725 725
Net cash provided by (used in)
financing activities 381,473 (126,163) (100,895) 1,202,082 470,912
Effect of foreign currency exchange
rates on cash, cash equivalents and
restricted cash 21,883 (13,528) (2,963) 8,766 (33,907)
Net increase (decrease) in cash, cash
equivalents and restricted cash 466,480 (217,159) (270,800) 1,259,009 (823,097)
Cash, cash equivalents and restricted
cash at beginning of period 1,420,133 1,637,292 898,404 627,604 1,450,701
Cash, cash equivalents and restricted
cash at end of period $
1,886,613 $
1,420,133 $
627,604 $
1,886,613 $
627,604
Supplemental cash flow information:
Cash paid for taxes $
47,507 $
29,383 $
15,727 $
136,583 $
93,375
Cash paid for interest $
141,140 $
153,265 $
121,779 $
553,815 $
496,794
Free cash flow (negative free cash
flow) (1) $
68,900 $
(74,563) $
(168,344) $
68,684 $
(1,280,699)
Adjusted free cash flow (adjusted
negative free cash flow) (2) $
173,765 $
(57,711) $
(122,036) $
271,980 $
(268,594)
(1) We define free cash flow (negative free cash flow) as net cash provided by operating activities plus net cash provided by
(used in) investing activities (excluding the net purchases, sales and maturities of investments) as presented below:
Net cash provided by operating activities
as presented above $
529,670 $
498,994 $
558,629 $
1,992,728 $
1,815,426
Net cash used in investing activities as
presented above (466,546) (576,462) (725,571) (1,944,567) (3,075,528)
Purchases, sales and maturities of
investments, net 5,776 2,905 (1,402) 20,523 (20,597)
Free cash flow (negative free cash flow) $
68,900 $
(74,563) $
(168,344) $
68,684 $
(1,280,699)
(2) We define adjusted free cash flow (adjusted negative free cash flow) as free cash flow (negative 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 (negative free cash flow)
as defined above) $
68,900 $
(74,563) $
(168,344) $
68,684 $
(1,280,699)
Less business acquisitions, net of cash
and restricted cash acquired 502 34,143 829,687
Less purchases of real estate 104,865 16,852 45,806 169,153 182,418
Adjusted free cash flow (adjusted negative
free cash flow) $
173,765 $
(57,711) $
(122,036) $
271,980 $
(268,594)
EQUINIX, INC.
Non-GAAP Measures and Other Supplemental Data
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2019 2019 2018 2019 2018
Recurring revenues $
1,337,977 $
1,319,336 $
1,230,318 $
5,238,186 $
4,776,502
Non-recurring revenues 79,158 77,474 79,765 323,954 295,152
Revenues (1) 1,417,135 1,396,810 1,310,083 5,562,140 5,071,654
Cash cost of revenues (2) 477,144 464,950 445,995 1,851,458 1,696,436
Cash gross profit (3) 939,991 931,860 864,088 3,710,682 3,375,218
Cash operating expenses (4)(7):
Cash sales and marketing expenses (5) 100,430 98,117 99,613 401,877 382,489
Cash general and administrative 163,701 159,041 147,280 621,078 579,489
expenses (6)
Total cash operating expenses (4)(7) 264,131 257,158 246,893 1,022,955 961,978
Adjusted EBITDA (8) $
675,860 $
674,702 $
617,195 $
2,687,727 $
2,413,240
Cash gross margins (9) 66 67 66 67 67
% % % % %
Adjusted EBITDA 48 48 47 48 48
% % % % %
margins (10)
Adjusted EBITDA flow-through rate (11) 6 (20) 18 56 51
%
% % % %
FFO (12) $
304,025 $
331,485 $
332,810 $
1,314,556 $
1,253,120
AFFO (13) (14) $
472,611 $
472,744 $
414,145 $
1,931,122 $
1,659,097
Basic FFO per share (15) $
3.56 $
3.90 $
4.13 $
15.62 $
15.71
Diluted FFO per share (15) $
3.54 $
3.87 $
4.12 $
15.52 $
15.63
Basic AFFO per share (15) $
5.54 $
5.56 $
5.14 $
22.95 $
20.80
Diluted AFFO per share(15) $
5.51 $
5.52 $
5.13 $
22.81 $
20.69
(1) The geographic split of our revenues on a services basis is presented below:
Americas Revenues:
Colocation $
443,991 $
441,596 $
438,150 $
1,769,654 $
1,732,998
Interconnection 149,474 146,212 137,031 576,709 532,163
Managed infrastructure 21,485 24,082 20,070 90,262 75,595
Other 5,020 3,392 5,350 19,743 16,570
Recurring revenues 619,970 615,282 600,601 2,456,368 2,357,326
Non-recurring revenues 33,696 29,993 37,547 131,359 127,408
Revenues $
653,666 $
645,275 $
638,148 $
2,587,727 $
2,484,734
EMEA Revenues:
Colocation $
359,423 $
357,201 $
315,118 $
1,395,544 $
1,201,769
Interconnection 44,350 41,063 35,288 161,552 138,874
Managed infrastructure 28,495 27,651 29,881 113,631 118,685
Other 3,458 1,787 1,482 10,019 8,164
Recurring revenues 435,726 427,702 381,769 1,680,746 1,467,492
Non-recurring revenues 28,063 30,438 21,315 125,698 95,145
Revenues $
463,789 $
458,140 $
403,084 $
1,806,444 $
1,562,637
Asia-Pacific Revenues:
Colocation $
219,306 $
214,304 $
191,891 $
857,009 $
735,404
Interconnection 41,180 39,495 34,917 155,328 130,928
Managed infrastructure 21,795 22,553 21,140 88,735 85,352
Recurring revenues 282,281 276,352 247,948 1,101,072 951,684
Non-recurring revenues 17,399 17,043 20,903 66,897 72,599
Revenues $
299,680 $
293,395 $
268,851 $
1,167,969 $
1,024,283
Worldwide Revenues:
Colocation $
1,022,720 $
1,013,101 $
945,159 $
4,022,207 $
3,670,171
Interconnection 235,004 226,770 207,236 893,589 801,965
Managed infrastructure 71,775 74,286 71,091 292,628 279,632
Other 8,478 5,179 6,832 29,762 24,734
Recurring revenues 1,337,977 1,319,336 1,230,318 5,238,186 4,776,502
Non-recurring revenues 79,158 77,474 79,765 323,954 295,152
Revenues $
1,417,135 $
1,396,810 $
1,310,083 $
5,562,140 $
5,071,654
(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 $
725,636 $
704,339 $
670,935 $
2,810,184 $
2,605,475
Depreciation, amortization and accretion
expense (241,753) (232,285) (219,799) (933,371) (890,792)
Stock-based compensation expense (6,739) (7,104) (5,141) (25,355) (18,247)
Cash cost of revenues $
477,144 $
464,950 $
445,995 $
1,851,458 $
1,696,436
The geographic split of our cash cost of revenues is presented below:
Americas cash cost of revenues $
184,029 $
182,516 $
184,545 $
729,100 $
710,683
EMEA cash cost of revenues 187,972 180,370 161,781 720,890 629,853
Asia-Pacific cash cost of revenues 105,143 102,064 99,669 401,468 355,900
Cash cost of revenues $
477,144 $
464,950 $
445,995 $
1,851,458 $
1,696,436
(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 $
406,060 $
403,386 $
367,950 $
1,586,064 $
1,460,396
Depreciation and amortization expense (86,542) (89,461) (85,331) (351,925) (335,949)
Stock-based compensation expense (55,387) (56,767) (35,726) (211,184) (162,469)
Cash operating expense $
264,131 $
257,158 $
246,893 $
1,022,955 $
961,978
(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 $
160,556 $
161,574 $
161,804 $
651,046 $
633,702
Depreciation and amortization expense (47,659) (47,663) (48,723) (192,450) (197,765)
Stock-based compensation expense (12,467) (15,794) (13,468) (56,719) (53,448)
Cash sales and marketing expense $
100,430 $
98,117 $
99,613 $
401,877 $
382,489
(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 $
245,504 $
241,812 $
206,146 $
935,018 $
826,694
Depreciation and amortization expense (38,883) (41,798) (36,608) (159,475) (138,184)
Stock-based compensation expense (42,920) (40,973) (22,258) (154,465) (109,021)
Cash general and administrative expense $
163,701 $
159,041 $
147,280 $
621,078 $
579,489
(7)
The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below:
Americas cash SG&A $
155,561 $
156,103 $
151,279 $
621,005 $
590,220
EMEA cash SG&A 69,072 65,252 59,813 257,574 234,504
Asia-Pacific cash SG&A 39,498 35,803 35,801 144,376 137,254
Cash SG&A $
264,131 $
257,158 $
246,893 $
1,022,955 $
961,978
(8) We define adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation,
restructuring charges, impairment charges, transaction costs and gain or loss on asset sales as presented below:
Income from operations $
312,974 $
285,368 $
270,717 $
1,169,631 $
977,383
Depreciation, amortization and accretion
expense 328,295 321,746 305,130 1,285,296 1,226,741
Stock-based compensation expense 62,126 63,871 40,867 236,539 180,716
Impairment charges (233) 1,189 15,790
Transaction costs 16,545 2,991 481 24,781 34,413
Gain on asset sales (43,847) (463) (44,310) (6,013)
Adjusted EBITDA $
675,860 $
674,702 $
617,195 $
2,687,727 $
2,413,240
The geographic split of our adjusted EBITDA is presented below:
Americas income from operations $
136,236 $
88,494 $
116,627 $
413,936 $
412,610
Americas depreciation, amortization and
accretion expense 165,580 168,397 159,762 668,727 635,045
Americas stock-based compensation expense 44,878 48,377 25,662 170,102 123,461
Americas impairment charges (233) 1,189 15,790
Americas transaction costs 13,378 199 273 14,830 12,715
Americas gain on asset sales (45,763) (45,763)
Americas adjusted EBITDA $
314,076 $
306,656 $
302,324 $
1,237,622 $
1,183,831
EMEA income from operations $
96,453 $
113,771 $
86,184 $
421,786 $
312,163
EMEA depreciation, amortization and
accretion expense 95,264 87,010 85,731 354,930 356,241
EMEA stock-based compensation expense 10,788 9,792 8,779 40,796 32,853
EMEA transaction costs 2,324 2,408 796 9,015 3,036
EMEA (gain) loss on asset sales 1,916 (463) 1,453 (6,013)
EMEA adjusted EBITDA $
206,745 $
212,518 $
181,490 $
827,980 $
698,280
Asia-Pacific income from operations $
80,285 $
83,103 $
67,906 $
333,909 $
252,610
Asia-Pacific depreciation, amortization and
accretion expense 67,451 66,339 59,637 261,639 235,455
Asia-Pacific stock-based compensation
expense 6,460 5,702 6,426 25,641 24,402
Asia-Pacific transaction costs 843 384 (588) 936 18,662
Asia-Pacific adjusted EBITDA $
155,039 $
155,528 $
133,381 $
622,125 $
531,129
(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 72
% 72
% 71
% 72
% 71
%
EMEA cash gross margins 59
% 61
% 60
% 60
% 60
%
Asia-Pacific cash gross margins 65
% 65
% 63
% 66
% 65
%
(10)
We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA margins 48
% 48
% 47
% 48
% 48
%
EMEA adjusted EBITDA margins 45
% 46
% 45
% 46
% 45
%
Asia-Pacific adjusted EBITDA margins 52
% 53
% 50
% 53
% 52
%
(11) We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as
follows:
Adjusted EBITDA - current period $
675,860 $
674,702 $
617,195 $
2,687,727 $
2,413,240
Less adjusted EBITDA -prior period (674,702) (677,010) (612,526) (2,413,240) (2,052,041)
Adjusted EBITDA growth $
1,158 $
(2,308) $
4,669 $
274,487 $
361,199
Revenues - current period $
1,417,135 $
1,396,810 $
1,310,083 $
5,562,140 $
5,071,654
Less revenues - prior period (1,396,810) (1,384,977) (1,283,751) (5,071,654) (4,368,428)
Revenue growth $
20,325 $
11,833 $
26,332 $
490,486 $
703,226
Adjusted EBITDA flow-through rate 6
% (20)
% 18
% 56
% 51
%
(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 $
124,835 $
120,811 $
110,022 $
507,245 $
365,359
Net loss attributable to non-controlling
interests 160 39 205
Net income attributable to Equinix 124,995 120,850 110,022 507,450 365,359
Adjustments:
Real estate depreciation 221,143 209,903 219,217 845,798 883,118
(Gain) loss on disposition of real estate
property (42,758) 732 3,571 (39,337) 4,643
Adjustments for FFO from unconsolidated
joint ventures 645 645
FFO attributable to common shareholders $
304,025 $
331,485 $
332,810 $
1,314,556 $
1,253,120
(13) AFFO is defined as FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based
compensation, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line
rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums,
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 attributable to common shareholders $
304,025 $
331,485 $
332,810 $
1,314,556 $
1,253,120
Adjustments:
Installation revenue adjustment 2,751 5,759 4,650 11,031 10,858
Straight-line rent expense adjustment 773 2,716 1,687 8,167 7,203
Amortization of deferred financing costs and
debt discounts and premiums 3,613 3,196 3,009 13,042 13,618
Contract cost adjustment (11,556) (10,179) (7,348) (40,861) (20,358)
Stock-based compensation expense 62,126 63,871 40,867 236,539 180,716
Non-real estate depreciation expense 60,712 63,151 37,674 242,761 140,955
Amortization expense 48,689 48,837 49,973 196,278 203,416
Accretion expense (adjustment) (2,249) (145) (1,734) 459 (748)
Recurring capital expenditures (80,925) (47,404) (70,234) (186,002) (203,053)
(Gain) loss on debt extinguishment 52,758 (315) 12,163 52,825 51,377
Transaction costs 16,545 2,991 481 24,781 34,413
Impairment charges (233) 1,189 15,790
Income tax expense adjustment 13,502 7,592 10,147 39,676 (12,420)
Adjustments for AFFO from unconsolidated
joint ventures 2,080 2,080
AFFO attributable to common shareholders $
472,611 $
472,744 $
414,145 $
1,931,122 $
1,659,097
(14)
Following is how we reconcile from adjusted EBITDA to AFFO:
Adjusted EBITDA $
675,860 $
674,702 $
617,195 $
2,687,727 $
2,413,240
Adjustments:
Interest expense, net of interest income (110,085) (110,473) (126,976) (451,987) (507,012)
Amortization of deferred financing costs and
debt discounts and premiums 3,613 3,196 3,009 13,042 13,618
Income tax expense (37,632) (57,827) (26,054) (185,352) (67,679)
Income tax expense adjustment 13,502 7,592 10,147 39,676 (12,420)
Straight-line rent expense adjustment 773 2,716 1,687 8,167 7,203
Contract cost adjustment (11,556) (10,179) (7,348) (40,861) (20,358)
Installation revenue adjustment 2,751 5,759 4,650 11,031 10,858
Recurring capital expenditures (80,925) (47,404) (70,234) (186,002) (203,053)
Other income 12,336 3,428 4,498 27,778 14,044
(Gain) loss on disposition of real estate
property (42,758) 732 3,571 (39,337) 4,643
Adjustments for unconsolidated JVs' and non-
controlling interests 2,885 39 2,930
Adjustment for gain on sale of asset 43,847 463 44,310 6,013
AFFO attributable to common shareholders $
472,611 $
472,744 $
414,145 $
1,931,122 $
1,659,097
(15) The shares used in the computation of basic and diluted FFO and AFFO per share attributable to Equinix is presented below:
Shares used in computing basic net income
per share, FFO per share and AFFO per share 85,289 85,012 80,509 84,140 79,779
Effect of dilutive securities:
Employee equity awards 542 559 231 539 418
Shares used in computing diluted net income
per share, FFO per share and AFFO per share 85,831 85,571 80,740 84,679 80,197
Basic FFO per share $
3.56 $
3.90 $
4.13 $
15.62 $
15.71
Diluted FFO per share $
3.54 $
3.87 $
4.12 $
15.52 $
15.63
Basic AFFO per share $
5.54 $
5.56 $
5.14 $
22.95 $
20.80
Diluted AFFO per share $
5.51 $
5.52 $
5.13 $
22.81 $
20.69
View original content to download multimedia:http://www.prnewswire.com/news-releases/equinix-reports-fourth-quarter-and-full-year-2019-results-301003932.html
SOURCE Equinix, Inc.
