Equinix Reports First Quarter 2020 Results
REDWOOD CITY, Calif., May 6, 2020 /PRNewswire/ --
-- Quarterly revenues increased 6% over the same quarter last year to
$1.445 billion, or 7% on a normalized and constant currency basis,
representing the 69(th) consecutive quarter of revenue growth
-- Key customer expansions included Hurricane Electric, TikTok and Zoom
-- Customer deployments across multiple metros comprised 87% of total
recurring revenues, demonstrating the value of the Equinix global
platform
-- Interconnection revenues in the quarter increased 14% over the same
quarter last year, or 15% on a normalized and constant currency basis, a
sustainable and steady increase over the past few quarters
-- Peak Equinix Internet Exchange(TM) traffic increased 44% over the same
quarter last year, or over 20% compared to the prior quarter, reflecting
the impact of the sudden global shift to remote and work-from-home
practices
Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported results for the quarter ended March 31, 2020. 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.
First Quarter 2020 Results Summary
-- Revenues
-- $1.445 billion, a 2% increase over the previous quarter
-- Includes $15 million of negative foreign currency impact when
compared to prior guidance rates
-- Operating Income
-- $253 million, a 19% decrease from the previous quarter, largely due
to the sale of certain assets in Q4 to the EMEA xScale(TM) joint
venture, and an operating margin of 18%
-- Adjusted EBITDA
-- $684 million, a 47% adjusted EBITDA margin, including higher
seasonal costs
-- Includes $7 million of negative foreign currency impact when
compared to prior guidance rates
-- Includes $3 million of integration costs
-- Net Income and Net Income per Share attributable to Equinix
-- $119 million, a 5% decrease from the previous quarter
-- $1.38 per share, a 5% decrease from the previous quarter
-- AFFO and AFFO per Share
-- $535 million, a 13% increase over the previous quarter
-- $6.21 per share, a 13% increase over the previous quarter
-- Includes $3 million of integration costs
2020 Annual Guidance Summary
-- Revenues
-- $5.877 - $5.985 billion, a 6 - 8% increase over the previous year,
or a normalized and constant currency increase of 7 - 9%
-- Includes a negative foreign currency impact of $105 million when
compared to the prior guidance FX rates due to a strong U.S. dollar
compared to our more significant other operating currencies,
including the Euro, Pound and Brazilian Real
-- Adjusted EBITDA
-- $2.765 - $2.845 billion, a 47% adjusted EBITDA margin
-- Includes a negative foreign currency impact of $48 million when
compared to the prior guidance FX rates
-- Assumes $20 million of integration costs
-- AFFO and AFFO per Share
-- $2.043 - $2.133 billion, an increase of 6 - 10% over the previous
year, or a normalized and constant currency increase of 11 - 16%
-- $23.62 - $24.66 per share, an increase of 4 - 8% over the previous
year, or a normalized and constant currency increase of 8 - 12%
-- Includes a negative foreign currency impact of $35 million when
compared to the prior guidance FX rates
-- Assumes $20 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.
Equinix Quote
Charles Meyers, President and CEO, Equinix:
"These are unprecedented times and our hearts go out to those who have been impacted by COVID-19. We extend our gratitude to all the front-line workers who are helping to keep us safe and healthy during this global pandemic. The Equinix business continues to perform well and show resiliency through these times of uncertainty, enabling us to remain focused on the clear set of priorities we laid out at the beginning of the year--investing in our people, evolving our platform and service portfolio to meet the changing needs of customers, expanding our go-to-market engine to fuel long-term growth, and simplifying our business to drive operating leverage and enhance our customer experience."
Business Highlights
-- Interconnection revenues in Q1 grew 14% year-over-year, or 15% on a
normalized and constant currency basis, steadily rising over the last
few quarters, reflecting the demand across our portfolio of
interconnection products. Today, Equinix has the most comprehensive
global interconnection platform, comprising over 370,000 physical and
virtual interconnections. In Q1, Equinix added an incremental 6,800
interconnections, fueled by content video streaming and unified
communication services. Equinix Cloud Exchange Fabric(TM) (ECX
Fabric(TM)) demonstrated strong growth in average revenue per user, as
higher bandwidth and inter-metro connections become a larger share of
the total.
-- Equinix continues the growth of its indirect selling initiatives, as the
company pursues high-value strategic channel partnerships. In Q1,
channel activity accounted for approximately 30% of bookings, including
wins across a wide range of industry segments with projects focused on
digital transformation efforts, as well as COVID-19 responses.
-- Equinix delivered strong bookings in the quarter, the second-best Q1
bookings performance in the company's history, reflecting diverse
customer demand and robust interconnection growth. The network vertical
achieved its third-highest bookings, with strong network reseller
activity driving a diverse funnel of enterprise deals and internet
capacity upgrades to support increased bandwidth for work-from-home
employees. The content and digital media vertical also saw strong
bookings with strength in video and social media.
-- As part of the company's hyperscale initiative, on April 21, 2020,
Equinix signed a greater than $1.0 billion initial 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 Japan.
The three initial facilities in the joint venture--one in Osaka and two
in Tokyo--will serve the unique core workload deployment needs of a
targeted group of hyperscale companies, including the world's largest
cloud service providers. This is Equinix's second joint venture with
GIC. In 2019, Equinix and GIC announced the formation of a joint venture
to develop and operate xScale data centers in Europe.
-- On March 3, 2020, Equinix announced the completion of the $335 million
acquisition of Packet. Now operating as "Packet, an Equinix company,"
the Packet team is contributing to Equinix's strategy to help
enterprises seamlessly deploy hybrid multicloud architectures by
developing new solutions that combine Packet's leading bare metal
automation technology with the rich ecosystems, global reach and
interconnection fabric of Platform Equinix(®).
-- Equinix continues to advance the company's sustainability agenda with
meaningful progress across environmental, social and governance (ESG)
initiatives. On May 5, 2020, Equinix launched its fifth annual
sustainability report highlighting FY19 ESG metrics and progress,
reinforcing the company's commitment toward 100% clean and renewable
energy use, and its transparency around the impact of the company's
global operations as it continues to grow a sustainable business.
COVID-19 Update
Many of our IBX(® )data centers have been identified as "essential businesses" or "critical infrastructure" by local governments for purposes of remaining open during the COVID-19 pandemic, and all IBX data centers remain operational at the time of filing of this press release. We have implemented precautionary measures to minimize the risk of operational impact and to protect the health and safety of our employees, customers, partners and communities. These include implementing tools such as an appointment-based system to control timing and frequency of visits while also encouraging our customers to leverage our IBX technicians via Smart Hands(®) in order to restrict visits and minimize the number of people and the amount of time spent in our IBX facilities. For the health and safety of our employees, we have temporarily closed all of our corporate offices and instructed our non-IBX employees across the globe to work from home.
The full potential impact of the COVID-19 pandemic on our financial condition or results of operations remains uncertain and will depend on a number of factors, including its impact on our customers, partners and vendors, and the impact and functioning of the global financial markets. Additional information pertaining to the impact of COVID-19 on Equinix and our response thereto will be provided in our upcoming Form 10-Q for the quarter ended March 31, 2020.
Business Outlook
Equinix widened quarterly total revenues and adjusted EBITDA guidance ranges to account for the possible net financial impact associated with COVID-19. For the second quarter of 2020, the Company expects revenues to range between $1.446 and $1.466 billion, an increase of 0 - 2% quarter-over-quarter, or a normalized and constant currency increase of approximately 1 - 2%. This guidance includes a negative foreign currency impact of $17 million when compared to the average foreign currency ("FX") rates in Q1 2020 and an approximate $6 million impact from the COVID-19 reduction in revenues attributed to the waiver of certain Smart Hands fees. Adjusted EBITDA is expected to range between $679 and $699 million, including a negative foreign currency impact of $7 million when compared to the average FX rates in Q1 2020, $8 million of integration costs from acquisitions, and the flow-through impacts related to COVID-19. Recurring capital expenditures are expected to range between $26 and $36 million.
Equinix widened full-year total revenues, adjusted EBITDA and AFFO guidance ranges to account for the possible net financial impact associated with COVID-19. For the full year of 2020, total revenues are expected to range between $5.877 and $5.985 billion, a 6 - 8% increase over the previous year, or a normalized and constant currency increase of approximately 7 - 9%. Revenues attributed to the Packet acquisition are expected to range between $32 and $40 million. This guidance includes a negative foreign currency impact of $105 million when compared to the prior guidance FX rates. Adjusted EBITDA is expected to range between $2.765 and $2.845 billion, an adjusted EBITDA margin of 47% at the mid-point. This adjusted EBITDA includes a negative foreign currency impact of $48 million when compared to the prior guidance FX rates. For the year, the company expects to incur $20 million in integration costs related to acquisitions. AFFO is expected to range between $2.043 and $2.133 billion, an increase of 6 - 10% over the previous year, including a negative foreign currency impact of $35 million when compared to the prior guidance FX rates, or a normalized and constant currency increase of 11 - 16% and $20 million of integration costs related to our acquisitions. This updated AFFO guidance, on a constant currency basis, effectively reaffirms prior full-year underlying AFFO guidance at the mid-point. AFFO per share is expected to range between $23.62 and $24.66, an increase of 4 - 8% over the previous year, or a normalized and constant currency increase of 8 - 12%. This excludes any potential financing or refinancing the Company may undertake in the future. Non-recurring capital expenditures are expected to range between $1.900 and $2.090 billion, and recurring capital expenditures are expected to range between $150 and $160 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 $1.13 to the Euro, $1.28 to the Pound, S$1.42 to the U.S. dollar, ¥108 to the U.S. dollar, and R$5.21 to the U.S. dollar. The Q1 2020 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.
Q1 2020 Results Conference Call and Replay Information
Equinix will discuss its quarterly results for the period ended March 31, 2020, along with its future outlook, in its quarterly conference call on Wednesday, May 6, 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, July 29, 2020, by dialing 1-203-369-0156 and referencing the passcode 2020. In addition, the webcast will be available 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 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, risks to our business and operating results related to the COVID-19 pandemic; 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 and upcoming 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
March 31, December 31, March 31,
2020 2019 2019
---
Recurring revenues $
1,361,694 $
1,337,977 $
1,274,828
Non-recurring revenues 82,848 79,158 88,390
Revenues 1,444,542 1,417,135 1,363,218
Cost of revenues 736,282 725,636 682,030
Gross profit 708,260 691,499 681,188
Operating expenses:
Sales and marketing 180,450 160,556 169,715
General and administrative 261,597 245,504 215,046
Transaction costs 11,530 16,545 2,471
Impairment charges - (233) 14,448
(Gain) loss on asset sales 1,199 (43,847)
Total operating expenses 454,776 378,525 401,680
Income from operations 253,484 312,974 279,508
Interest and other income (expense):
Interest income 4,273 7,532 4,202
Interest expense (107,338) (117,617) (122,846)
Other income (expense) 5,170 12,336 (166)
Loss on debt extinguishment (6,441) (52,758) (382)
Total interest and other,
net (104,336) (150,507) (119,192)
Income before income taxes 149,148 162,467 160,316
Income tax expense (30,191) (37,632) (42,569)
Net income 118,957 124,835 117,747
Net (income) loss
attributable to non-
controlling interests (165) 160 331
Net income attributable to
Equinix $
118,792 $
124,995 $
118,078
Net income per share attributable to Equinix:
Basic net income per share $
1.39 $
1.47 $
1.44
Diluted net income per
share $
1.38 $
1.46 $
1.44
Shares used in computing
basic net income per share 85,551 85,289 81,814
Shares used in computing
diluted net income per
share 86,144 85,831 82,090
EQUINIX, INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2020 2019 2019
---
Net income $
118,957 $
124,835 $
117,747
Other comprehensive loss, net of tax:
Foreign currency translation adjustment
("CTA") gain (loss) (413,792) 283,185 (81,719)
Net investment hedge CTA gain (loss) 144,946 (154,596) 76,850
Unrealized gain (loss) on cash flow
hedges (3,256) (22,928) 8,224
Net actuarial gain (loss) on defined
benefit plans 35 (22) (11)
Total other comprehensive income (loss),
net of tax (272,067) 105,639 3,344
Comprehensive income (loss), net of tax (153,110) 230,474 121,091
Net (income) loss attributable to non-
controlling interests (165) 160 331
Other comprehensive (income) loss
attributable to non-controlling
interests 11 (16) (7)
Comprehensive income (loss) attributable
to Equinix $
(153,264) $
230,618 $
121,415
EQUINIX, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, 2020 December 31, 2019
---
Assets
Cash and cash
equivalents $
1,171,339 $
1,869,577
Short-term
investments 25,833 10,362
Accounts receivable,
net 687,153 689,134
Other current assets 435,784 303,543
Total current assets 2,320,109 2,872,616
Property, plant and
equipment, net 12,177,044 12,152,597
Operating lease right-
of-use assets 1,414,711 1,475,367
Goodwill 4,927,459 4,781,858
Intangible assets, net 2,108,539 2,102,389
Other assets 642,836 580,788
Total assets $
23,590,698 $
23,965,615
Liabilities and Stockholders' Equity
Accounts payable and
accrued expenses $
717,574 $
760,718
Accrued property,
plant and equipment 317,144 301,535
Current portion of
operating lease
liabilities 140,596 145,606
Current portion of
finance lease
liabilities 89,262 75,239
Current portion of
mortgage and loans
payable 74,473 77,603
Current portion of
senior notes 300,401 643,224
Other current
liabilities 199,023 153,938
Total current
liabilities 1,838,473 2,157,863
Operating lease
liabilities, less
current portion 1,261,964 1,315,656
Finance lease
liabilities, less
current portion 1,489,945 1,430,882
Mortgage and loans
payable, less current
portion 1,469,195 1,289,434
Senior notes, less
current portion 8,253,745 8,309,673
Other liabilities 608,082 621,725
Total liabilities 14,921,404 15,125,233
Common stock 86 86
Additional paid-in
capital 12,893,455 12,696,433
Treasury stock (127,298) (144,256)
Accumulated dividends (4,399,527) (4,168,469)
Accumulated other
comprehensive loss (1,206,669) (934,613)
Retained earnings 1,509,317 1,391,425
Total Equinix
stockholders' equity 8,669,364 8,840,606
Non-controlling
interests (70) (224)
Total stockholders'
equity 8,669,294 8,840,382
Total liabilities and
stockholders' equity $
23,590,698 $
23,965,615
Ending headcount by geographic region is as
follows:
Americas headcount 3,924 3,672
EMEA headcount 3,044 2,941
Asia-Pacific
headcount 1,813 1,765
Total headcount 8,781 8,378
EQUINIX, INC.
Summary of Debt Principal Outstanding
(in thousands)
(unaudited)
March 31, 2020 December 31, 2019
---
Finance lease
liabilities $
1,579,207 $
1,506,121
Term loans 1,214,717 1,282,302
Revolving
credit
facility 250,000
Mortgage
payable and
other loans
payable 78,951 84,735
Plus: debt
discount and
issuance
costs, net 2,615 3,081
Total mortgage
and loans
payable
principal 1,546,283 1,370,118
Senior notes 8,554,146 8,952,897
Plus: debt
issuance costs 73,075 78,030
Less: debt
premium (1,121) (1,716)
Total senior
notes
principal 8,626,100 9,029,211
Total debt
principal
outstanding $
11,751,590 $
11,905,450
EQUINIX, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2020 2019 2019
Cash flows from operating activities:
Net income $
118,957 $
124,835 $
117,747
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 337,431 328,295 314,705
Stock-based compensation 64,499 62,126 49,023
Amortization of debt issuance costs and
debt discounts and premiums 3,460 3,613 2,995
Loss on debt extinguishment 6,441 52,758 382
(Gain) loss on asset sales 1,199 (43,847)
Impairment charges (233) 14,448
Other items 6,856 3,831 8,224
Changes in operating assets and liabilities:
Accounts receivable 15,306 96,480 (84,350)
Income taxes, net 3,697 (40,649) 15,825
Accounts payable and accrued expenses (25,681) (34,588) (11,463)
Operating lease right-of-use assets 38,797 40,805 41,264
Operating lease liabilities (35,193) (40,032) (38,886)
Other assets and liabilities (18,939) (23,724) (8,773)
Net cash provided by operating
activities 516,830 529,670 421,141
Cash flows from investing activities:
Purchases, sales and maturities of
investments, net (38,940) (5,776) (8,779)
Business acquisitions, net of cash and
restricted cash acquired (478,287)
Purchases of real estate (36,373) (104,865) (5,721)
Purchases of other property, plant and
equipment (400,941) (714,561) (363,967)
Proceeds from asset sales 358,656
Net cash used in investing activities (954,541) (466,546) (378,467)
Cash flows from financing activities:
Proceeds from employee equity awards 30,391 27,593
Payment of dividend distributions (233,479) (210,360) (204,603)
Proceeds from public offering of common
stock, net of offering costs 101,792 1,213,434
Proceeds from revolving credit facility 250,000
Proceeds from senior notes, net of debt
discounts 2,797,906
Repayment of finance lease liabilities (18,977) (63,701) (31,158)
Repayment of mortgage and loans payable (18,501) (19,431) (18,334)
Repayment of senior notes (343,711) (2,056,289)
Debt extinguishment costs (4,619) (43,311)
Debt issuance costs (23,341)
Net cash provided by (used in)
financing activities (237,104) 381,473 986,932
Effect of foreign currency exchange
rates on cash, cash equivalents and
restricted cash (25,287) 21,883 (1,695)
Net increase (decrease) in cash, cash
equivalents and restricted cash (700,102) 466,480 1,027,911
Cash, cash equivalents and restricted
cash at beginning of period 1,886,613 1,420,133 627,604
Cash, cash equivalents and restricted
cash at end of period $
1,186,511 $
1,886,613 $
1,655,515
Supplemental cash flow information:
Cash paid for taxes $
45,324 $
47,507 $
27,024
Cash paid for interest $
125,924 $
141,140 $
146,144
Free cash flow (negative free cash
flow) (1) $
(398,771) $
68,900 $
51,453
Adjusted free cash flow (2) $
115,889 $
173,765 $
57,174
(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 $
516,830 $
529,670 $
421,141
Net cash used in investing activities as
presented above (954,541) (466,546) (378,467)
Purchases, sales and maturities of
investments, net 38,940 5,776 8,779
Free cash flow (negative free cash flow) $
(398,771) $
68,900 $
51,453
(2) We define adjusted 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 $
(398,771) $
68,900 $
51,453
Less business acquisitions, net of cash
and restricted cash acquired 478,287
Less purchases of real estate 36,373 104,865 5,721
Adjusted free cash flow $
115,889 $
173,765 $
57,174
EQUINIX, INC.
Non-GAAP Measures and Other Supplemental Data
(in thousands)
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2020 2019 2019
Recurring revenues $
1,361,694 $
1,337,977 $
1,274,828
Non-recurring revenues 82,848 79,158 88,390
Revenues (1) 1,444,542 1,417,135 1,363,218
Cash cost of revenues (2) 476,541 477,144 448,381
Cash gross profit (3) 968,001 939,991 914,837
Cash operating expenses (4)(7):
Cash sales and marketing expenses (5) 115,671 100,430 108,216
Cash general and administrative expenses (6) 168,120 163,701 146,466
Total cash operating expenses (4)(7) 283,791 264,131 254,682
Adjusted EBITDA (8) $
684,210 $
675,860 $
660,155
Cash gross margins (9) 67 66 67
% % %
Adjusted EBITDA margins (10) 47 48 48
% % %
Adjusted EBITDA flow-through rate (11) 30 6 81
% % %
FFO (12) $
343,754 $
304,025 $
326,073
AFFO (13)(14) $
534,705 $
472,611 $
488,120
Basic FFO per share (15) $
4.02 $
3.56 $
3.99
Diluted FFO per share (15) $
3.99 $
3.54 $
3.97
Basic AFFO per share (15) $
6.25 $
5.54 $
5.97
Diluted AFFO per share (15) $
6.21 $
5.51 $
5.95
(1) The geographic split of our revenues on a services basis is presented below:
Americas Revenues:
Colocation $
450,954 $
443,991 $
439,981
Interconnection 150,929 149,474 138,563
Managed infrastructure 25,529 21,485 21,787
Other 5,220 5,020 5,979
Recurring revenues 632,632 619,970 606,310
Non-recurring revenues 29,273 33,696 38,056
Revenues $
661,905 $
653,666 $
644,366
EMEA Revenues:
Colocation $
362,330 $
359,423 $
331,125
Interconnection 48,541 44,350 37,525
Managed infrastructure 30,137 28,495 29,088
Other 2,466 3,458 2,499
Recurring revenues 443,474 435,726 400,237
Non-recurring revenues 35,435 28,063 34,423
Revenues $
478,909 $
463,789 $
434,660
Asia-Pacific Revenues:
Colocation $
221,093 $
219,306 $
209,665
Interconnection 42,671 41,180 36,696
Managed infrastructure 21,824 21,795 21,920
Recurring revenues 285,588 282,281 268,281
Non-recurring revenues 18,140 17,399 15,911
Revenues $
303,728 $
299,680 $
284,192
Worldwide Revenues:
Colocation $
1,034,377 $
1,022,720 $
980,771
Interconnection 242,141 235,004 212,784
Managed infrastructure 77,490 71,775 72,795
Other 7,686 8,478 8,478
Recurring revenues 1,361,694 1,337,977 1,274,828
Non-recurring revenues 82,848 79,158 88,390
Revenues $
1,444,542 $
1,417,135 $
1,363,218
(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 $
736,282 $
725,636 $
682,030
Depreciation, amortization and accretion
expense (250,398) (241,753) (228,637)
Stock-based compensation expense (9,343) (6,739) (5,012)
Cash cost of revenues $
476,541 $
477,144 $
448,381
The geographic split of our cash cost of revenues is presented below:
Americas cash cost of revenues $
185,233 $
184,029 $
179,635
EMEA cash cost of revenues 187,248 187,972 173,201
Asia-Pacific cash cost of revenues 104,060 105,143 95,545
Cash cost of revenues $
476,541 $
477,144 $
448,381
(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 $
442,047 $
406,060 $
384,761
Depreciation and amortization expense (87,033) (86,542) (86,068)
Stock-based compensation expense (71,223) (55,387) (44,011)
Cash operating expense $
283,791 $
264,131 $
254,682
(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 $
180,450 $
160,556 $
169,715
Depreciation and amortization expense (46,234) (47,659) (48,198)
Stock-based compensation expense (18,545) (12,467) (13,301)
Cash sales and marketing expense $
115,671 $
100,430 $
108,216
(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 $
261,597 $
245,504 $
215,046
Depreciation and amortization expense (40,799) (38,883) (37,870)
Stock-based compensation expense (52,678) (42,920) (30,710)
Cash general and administrative expense $
168,120 $
163,701 $
146,466
(7) The geographic split of our cash operating expense, or cash SG&A, as defined above,
is presented below:
Americas cash SG&A $
183,059 $
155,561 $
156,893
EMEA cash SG&A 61,503 69,072 62,387
Asia-Pacific cash SG&A 39,229 39,498 35,402
Cash SG&A $
283,791 $
264,131 $
254,682
(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 $
253,484 $
312,974 $
279,508
Depreciation, amortization and accretion
expense 337,431 328,295 314,705
Stock-based compensation expense 80,566 62,126 49,023
Impairment charges (233) 14,448
Transaction costs 11,530 16,545 2,471
(Gain) loss on asset sales 1,199 (43,847)
Adjusted EBITDA $
684,210 $
675,860 $
660,155
The geographic split of our adjusted EBITDA is presented below:
Americas income from operations $
47,308 $
136,236 $
90,011
Americas depreciation, amortization and
accretion expense 171,439 165,580 167,136
Americas stock-based compensation expense 62,689 44,878 34,171
Americas impairment charges (233) 14,448
Americas transaction costs 10,978 13,378 2,072
Americas (gain) loss on asset sales 1,199 (45,763)
Americas adjusted EBITDA $
293,613 $
314,076 $
307,838
EMEA income from operations $
126,004 $
96,453 $
105,007
EMEA depreciation, amortization and
accretion expense 92,740 95,264 84,547
EMEA stock-based compensation expense 11,002 10,788 8,863
EMEA transaction costs 412 2,324 655
EMEA loss on asset sales 1,916
EMEA adjusted EBITDA $
230,158 $
206,745 $
199,072
Asia-Pacific income from operations $
80,172 $
80,285 $
84,490
Asia-Pacific depreciation, amortization and
accretion expense 73,252 67,451 63,022
Asia-Pacific stock-based compensation
expense 6,875 6,460 5,989
Asia-Pacific transaction costs 140 843 (256)
Asia-Pacific adjusted EBITDA $
160,439 $
155,039 $
153,245
(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
% 72
%
EMEA cash gross margins 61
% 59
% 60
%
Asia-Pacific cash gross margins 66
% 65
% 66
%
(10)
We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA margins 44
% 48
% 48
%
EMEA adjusted EBITDA margins 48
% 45
% 46
%
Asia-Pacific adjusted EBITDA margins 53
% 52
% 54
%
(11) We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth
divided by incremental revenue growth as follows:
Adjusted EBITDA - current period $
684,210 $
675,860 $
660,155
Less adjusted EBITDA -prior period (675,860) (674,702) (617,195)
Adjusted EBITDA growth $
8,350 $
1,158 $
42,960
Revenues - current period $
1,444,542 $
1,417,135 $
1,363,218
Less revenues - prior period (1,417,135) (1,396,810) (1,310,083)
Revenue growth $
27,407 $
20,325 $
53,135
Adjusted EBITDA flow-through rate 30
% 6
% 81
%
(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 $
118,957 $
124,835 $
117,747
Net (income) loss attributable to non-
controlling interests (165) 160 331
Net income attributable to Equinix 118,792 124,995 118,078
Adjustments:
Real estate depreciation 221,787 221,143 205,649
(Gain) loss on disposition of real estate
property 2,506 (42,758) 2,346
Adjustments for FFO from unconsolidated
joint ventures 669 645
FFO attributable to common shareholders $
343,754 $
304,025 $
326,073
(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 $
343,754 $
304,025 $
326,073
Adjustments:
Installation revenue adjustment (3,481) 2,751 1,029
Straight-line rent expense adjustment 1,806 773 2,378
Amortization of deferred financing costs and
debt discounts and premiums 3,460 3,613 2,995
Contract cost adjustment (10,434) (11,556) (6,778)
Stock-based compensation expense 80,566 62,126 49,023
Non-real estate depreciation expense 65,591 60,712 57,994
Amortization expense 48,491 48,689 49,535
Accretion expense (adjustment) 1,562 (2,249) 1,527
Recurring capital expenditures (17,868) (80,925) (20,947)
Loss on debt extinguishment 6,441 52,758 382
Transaction costs 11,530 16,545 2,471
Impairment charges (233) 14,448
Income tax expense adjustment 2,833 13,502 7,990
Adjustments for AFFO from unconsolidated
joint ventures 454 2,080
AFFO attributable to common shareholders $
534,705 $
472,611 $
488,120
(14)
Following is how we reconcile from adjusted EBITDA to AFFO:
Adjusted EBITDA $
684,210 $
675,860 $
660,155
Adjustments:
Interest expense, net of interest income (103,065) (110,085) (118,644)
Amortization of deferred financing costs and
debt discounts and premiums 3,460 3,613 2,995
Income tax expense (30,191) (37,632) (42,569)
Income tax expense adjustment 2,833 13,502 7,990
Straight-line rent expense adjustment 1,806 773 2,378
Contract cost adjustment (10,434) (11,556) (6,778)
Installation revenue adjustment (3,481) 2,751 1,029
Recurring capital expenditures (17,868) (80,925) (20,947)
Other income (expense) 5,170 12,336 (166)
(Gain) loss on disposition of real estate
property 2,506 (42,758) 2,346
Adjustments for unconsolidated JVs' and non-
controlling interests 958 2,885 331
Adjustment for gain (loss) on asset sales (1,199) 43,847
AFFO attributable to common shareholders $
534,705 $
472,611 $
488,120
(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 85,551 85,289 81,814
Effect of dilutive securities:
Employee equity awards 593 542 276
Shares used in computing diluted net income
per share, FFO per share and AFFO per share 86,144 85,831 82,090
Basic FFO per share $
4.02 $
3.56 $
3.99
Diluted FFO per share $
3.99 $
3.54 $
3.97
Basic AFFO per share $
6.25 $
5.54 $
5.97
Diluted AFFO per share $
6.21 $
5.51 $
5.95
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SOURCE Equinix, Inc.
