Equinix Reports Second Quarter 2020 Results

REDWOOD CITY, Calif., July 29, 2020 /PRNewswire/ --

    --  Quarterly revenues increased 6% over the same quarter last year to
        $1.470 billion, or 8% on a normalized and constant currency basis,
        representing the 70(th) consecutive quarter of revenue growth
    --  Delivered one of the strongest quarters of interconnection growth and
        activity in the company's history
    --  Customer deployments across multiple metros comprised 88% of total
        recurring revenues, demonstrating the value of the Equinix global
        platform

Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported results for the quarter ended June 30, 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.

Second Quarter 2020 Results Summary

    --  Revenues
        --  $1.470 billion, a 2% increase over the previous quarter
        --  Includes a $3 million foreign currency benefit when compared to
            prior guidance rates
    --  Operating Income
        --  $282 million, an 11% increase over the previous quarter and an
            operating margin of 19%
    --  Adjusted EBITDA
        --  $720 million, a 49% adjusted EBITDA margin
        --  Includes a $1 million foreign currency benefit when compared to
            prior guidance rates
        --  Includes $2 million of integration costs
    --  Net Income and Net Income per Share attributable to Equinix
        --  $133 million, a 12% increase over the previous quarter
        --  $1.52 per share, a 10% increase over the previous quarter
    --  AFFO and AFFO per Share
        --  $558 million, a 4% increase over the previous quarter
        --  $6.35 per share, a 2% increase over the previous quarter
        --  Includes $2 million of integration costs

2020 Annual Guidance Summary

    --  Revenues
        --  $5.919 - $5.989 billion, a 6 - 8% increase over the previous year,
            or a normalized and constant currency increase of 8 - 9%
        --  An increase of $23 million due to a foreign currency benefit when
            compared to the prior guidance FX rates
    --  Adjusted EBITDA
        --  $2.781 - $2.851 billion, a 47% adjusted EBITDA margin
        --  An increase of $11 million due to a foreign currency benefit when
            compared to the prior guidance FX rates
        --  Assumes $20 million of integration costs
    --  AFFO and AFFO per Share
        --  $2.107 - $2.177 billion, an increase of 9 - 13% over the previous
            year, or a normalized and constant currency increase of 14 - 18%; an
            increase of $54 million compared to prior guidance, including an $11
            million foreign currency benefit
        --  $23.87 - $24.67 per share, an increase of 5 - 8% over the previous
            year, or a normalized and constant currency increase of 8 - 12%;
            reaffirms prior full-year AFFO per share guidance while fully
            absorbing the dilution impact from the $1.7 billion public offering
            of common stock
        --  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:

"Even in the face of an uncertain macro environment created by the global pandemic, the Equinix business continues to perform well. The demand drivers for digital infrastructure have never been stronger, and our relevance in enabling our customers to respond effectively to their digital transformation imperatives continues to increase. The power of our global platform and the resiliency and adaptability of our global teams are helping us create distinct and durable value for our customers, driving strong business results and allowing us to remain focused on delivering a positive impact to our many stakeholders as we build an enduring and sustainable culture and business."

Business Highlights

    --  Equinix continued to invest in building out its global platform in
        response to strong customer demand and a high level of inventory
        utilization:
        --  On May 29, Equinix entered into an agreement to purchase a portfolio
            of 13 data center sites, representing 25 data centers, across Canada
            from BCE Inc. ("Bell") for approximately $750 million. The addition
            of these strategic assets, their associated operations and the more
            than 600 customers operating within the data centers will further
            strengthen Equinix's global platform. The acquisition will expand
            Equinix's coverage in Canada coast to coast, making it a market
            leader in data center and interconnection services. In addition to
            adding new capacity in Toronto, Ontario, where Equinix currently
            operates two International Business Exchange(TM) (IBX(®)) data
            centers, it will extend Equinix's interconnection services to seven
            new metros.
        --  Equinix continues its investment in organic growth and expansion
            activities with 29 major expansion projects underway in 20 markets
            across 14 countries.
        --  Additionally, Equinix completed seven new openings or phased
            expansions in Q2 in Amsterdam, Chicago, Dallas, Hamburg, Hong Kong,
            Toronto and Washington, D.C.
    --  In Q2, Equinix opened the 5G and Edge Proof of Concept Center (POCC) at
        its Dallas Infomart campus, which provides a 5G and edge "sandbox"
        environment, enabling Mobile Network Operators (MNOs), cloud platforms,
        technology vendors and enterprises to directly connect with the largest
        edge data center platform in order to test, demonstrate and accelerate
        complex 5G and edge deployment and interoperability scenarios. The POCC
        will support the growing demand for companies to accelerate their
        evolution from traditional to digital businesses.
    --  Equinix continues to strengthen its leadership position in the cloud
        ecosystem through the company's hyperscale strategy, expanding its
        footprint to service both retail and large footprint hyperscale
        requirements in key markets, while leveraging its joint venture
        relationship with GIC. Equinix is seeing strong customer demand in its
        initial European xScale JV(TM) with GIC, and is expected to expand this
        JV with its PA9x asset, which is expected to open early next year and is
        already 100% pre-leased to a major hyperscaler. Equinix is also
        targeting to close its new xScale JV in Japan with GIC in Q4, adding
        hyperscale assets in both Osaka and Tokyo.
    --  Interconnection revenues in Q2 grew 14% year-over-year, or 16% on a
        normalized and constant currency basis, steadily rising over the last
        few quarters, reflecting the demand across the Equinix portfolio for
        interconnection products. Today, Equinix has the most comprehensive
        global interconnection platform, comprising over 378,000 physical and
        virtual interconnections. In Q2, Equinix added an incremental 8,000
        interconnections, fueled by streaming, video conferencing, enterprise
        cloud connectivity and work-from-home local aggregation.
    --  Equinix had strong bookings across all three regions (Americas, EMEA and
        Asia-Pacific) in Q2, with record bookings in the Americas. The network
        vertical also achieved record bookings, driven by robust network
        reseller activity and network expansions to support traffic growth. The
        financial services vertical captured its second-highest bookings, with
        strength in global financial and insurance firms as they embrace digital
        transformation.
    --  Equinix's financial strength remains a significant and strategic
        advantage. In May, Equinix raised approximately $1.7 billion in common
        stock to support the continued organic and inorganic growth of the
        business and received its third investment grade rating when Moody's
        upgraded Equinix's corporate debt rating to Baa3 from Ba1. In June,
        Equinix leveraged the company's investment-grade ratings by refinancing
        $2.6 billion of high-yield debt at a blended interest rate of 2.07%. The
        interest savings from the refinancing effectively offset the dilution
        associated with equity raise.

COVID-19 Update

Many of the Company's 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. Precautionary measures have been implemented to minimize the risk of operational impact and to protect the health and safety of 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 customers to leverage IBX technicians via Smart Hands(®) in order to restrict visits and minimize the number of people and the amount of time spent in the Company's IBX facilities. For the health and safety of Equinix employees, the Company's corporate offices were closed in March and non-IBX employees across the globe were instructed to work from home until further notice. Recently, a phased plan has been announced for a return-to-office for non-IBX attached sites, and the Company will begin to open certain offices as local conditions allow. Additionally, the Company has decided to continue to limit employee travel and has made the decision to either postpone or virtualize all global events through January 2021.

Looking ahead, the full impact of the COVID-19 pandemic on the Company's financial condition or results of operations remains uncertain and will depend on a number of factors, including its impact on Equinix customers, partners and vendors and the impact on, and functioning of, the global financial markets. The Company's past results may not be indicative of future performance, and historical trends may differ materially. Additional information pertaining to the impact of COVID-19 on Equinix and the Company's response thereto will be provided in the upcoming Form 10-Q for the quarter ended June 30, 2020.

Business Outlook

For the third quarter of 2020, the Company expects revenues to range between $1.493 and $1.513 billion, an increase of 2 - 3% quarter-over-quarter, or a normalized and constant currency increase of approximately 1 - 3%. This guidance includes a $5 million foreign currency benefit when compared to the average foreign currency ("FX") rates in Q2 2020. Adjusted EBITDA is expected to range between $696 and $716 million, including a $3 million foreign currency benefit when compared to the average FX rates in Q2 2020 and $5 million of integration costs from acquisitions. Recurring capital expenditures are expected to range between $36 and $46 million.

For the full year of 2020, total revenues are expected to range between $5.919 and $5.989 billion, a 6 - 8% increase over the previous year, or a normalized and constant currency increase of approximately 8 - 9%. This $23 million guidance raise is due to a foreign currency benefit when compared to the prior guidance FX rates. Adjusted EBITDA is expected to range between $2.781 and $2.851 billion, an adjusted EBITDA margin of 47% at the mid-point. This $11 million guidance raise is due to a foreign currency benefit 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 $2.107 and $2.177 billion, an increase of 9 - 13% over the previous year, or a normalized and constant currency increase of 14 - 18% and $20 million of integration costs related to our acquisitions. This $54 million guidance raise includes an $11 million foreign currency benefit when compared to prior guidance rates. AFFO per share is expected to range between $23.87 and $24.67, an increase of 5 - 8% over the previous year, or a normalized and constant currency increase of 8 - 12%. This guidance reaffirms prior full-year underlying AFFO per share guidance while fully absorbing the dilution impact from the $1.7 billion public offering of common stock that the company undertook in the second quarter. This guidance excludes any potential financing or refinancing the Company may undertake in the future. Non-recurring capital expenditures are expected to range between $2.050 and $2.240 billion, including $150 million of incremental xScale capital expenditures which we expect to transfer to the Japan JV in Q4, 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$1.39 to the U.S. dollar, ¥108 to the U.S. dollar, and R$5.41 to the U.S. dollar. The Q2 2020 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 20%, 10%, 7%, 7% and 2%, 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.

Q2 2020 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended June 30, 2020, along with its future outlook, in its quarterly conference call on Wednesday, July 29, 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, November 4, 2020, by dialing 1-203-369-3598 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 55 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                                                               
           
            Six Months Ended


                                                                June 30,                                           March 31,                       June 30,                                June 30,                           June 30,
                                                                    2020                                       2020                            2019                                     2020                                2019

                                                                                                                                                                                                                         ---


     Recurring revenues                                                    $
         1,398,138                                       $
          1,361,694                                                            $
         1,306,045                       $
        2,759,832    $
        2,580,873


      Non-recurring revenues                                      71,983                                       82,848                                      78,932                                                         154,831           167,322



                 Revenues                                      1,470,121                                    1,444,542                                   1,384,977                                                       2,914,663         2,748,195



     Cost of revenues                                           739,344                                      736,282                                     698,179                                                       1,475,626         1,380,209



                 Gross profit                                    730,777                                      708,260                                     686,798                                                       1,439,037         1,367,986




     Operating expenses:


      Sales and marketing                                        178,124                                      180,450                                     159,201                                                         358,574           328,916


      General and administrative                                 256,890                                      261,597                                     232,656                                                         518,487           447,702



     Transaction costs                                           13,617                                       11,530                                       2,774                                                          25,147             5,245



     Impairment charges                                               -                                                                                    386                                                                           14,834


      (Gain) loss on asset sales                                   (342)                                       1,199                                                                                                        857



                 Total operating expenses                        448,289                                      454,776                                     395,017                                                         903,065           796,697



                 Income from operations                          282,488                                      253,484                                     291,781                                                         535,972           571,289




     Interest and other income (expense):



     Interest income                                              1,685                                        4,273                                       7,762                                                           5,958            11,964



     Interest expense                                         (108,480)                                   (107,338)                                   (120,547)                                                       (215,818)        (243,393)



     Other income                                                 4,278                                        5,170                                      12,180                                                           9,448            12,014


      Loss on debt extinguishment                                (1,868)                                     (6,441)                                                                                                   (8,309)            (382)



                 Total interest and other,
                  net                                          (104,385)                                   (104,336)                                   (100,605)                                                       (208,721)        (219,797)



                 Income before income taxes                      178,103                                      149,148                                     191,176                                                         327,251           351,492



     Income tax expense                                        (44,753)                                    (30,191)                                   (47,324)                                                       (74,944)         (89,893)



                 Net income                                      133,350                                      118,957                                     143,852                                                         252,307           261,599


      Net (income) loss
       attributable to non-
       controlling interests                                        (46)                                       (165)                                      (325)                                                          (211)                6



                 Net income attributable to
                  Equinix                                                $
      
           133,304                                 $
         
            118,792                                                         $
      
           143,527                    $
      
          252,096 $
      
          261,605




     
              Net income per share attributable to Equinix:


      Basic net income per share                                               $
           1.53                                          $
            1.39                                                               $
           1.70                          $
          2.92       $
          3.15



      Diluted net income per
       share                                                                   $
           1.52                                          $
            1.38                                                               $
           1.69                          $
          2.90       $
          3.13



      Shares used in computing
       basic net income per share                                 87,303                                       85,551                                      84,399                                                          86,427            83,114



      Shares used in computing
       diluted net income per
       share                                                      87,901                                       86,144                                      84,767                                                          87,065            83,471


                                                                                                                                    
              
                EQUINIX, INC.
                                                                                                                     
           Condensed Consolidated Statements of Comprehensive Income (Loss)
                                                                                                                                         
                (in thousands)
                                                                                                                                          
                (unaudited)




                                                                        
         
             Three Months Ended                                                                                           Six Months Ended


                                                            June 30,                                            March 31,                                    June 30,                              June 30,                            June 30,
                                                                2020                                     2020                                         2019                                    2020                               2019

                                                                                                                                                                                                                              ---


     Net income                                                           $
       133,350                                                 $
              118,957                                                             $
        143,852                          $
     252,307      $
      261,599




     Other comprehensive loss, net of tax:


      Foreign currency translation adjustment
       ("CTA") gain (loss)                                   181,286                                  (413,792)                                                   25,127                                                     (232,506)           (56,592)


      Net investment hedge CTA gain (loss)                  (97,058)                                   144,946                                                 (37,857)                                                       47,888              38,993


      Unrealized gain (loss) on cash flow
       hedges                                               (17,868)                                   (3,256)                                                 (3,355)                                                     (21,124)              4,869


      Net actuarial gain (loss) on defined
       benefit plans                                              20                                         35                                                      (7)                                                           55                (18)



      Total other comprehensive income (loss),
       net of tax                                             66,380                                  (272,067)                                                 (16,092)                                                    (205,687)           (12,748)



                   Comprehensive income (loss), net of tax   199,730                                  (153,110)                                                  127,760                                                        46,620             248,851


      Net (income) loss attributable to non-
       controlling interests                                    (46)                                     (165)                                                   (325)                                                        (211)                  6


      Other comprehensive (income) loss
       attributable to non-controlling
       interests                                                 (2)                                        11                                                       14                                                             9                   7



                   Comprehensive income (loss) attributable
                    to Equinix                                       $
       
         199,682                                   $
             
                (153,264)                                                     $
        
          127,449                       $
     
       46,418  $
     
        248,864


                                                                            
           
                EQUINIX, INC.
                                                                         
          Condensed Consolidated Balance Sheets
                                                                              
                (in thousands)
                                                                                
                (unaudited)




                                                                              June 30, 2020                                                  December 31, 2019

                                                                                                                                       ---

                              
              
                Assets


      Cash and cash
       equivalents                                                                                          $
             4,785,050                                  $
        1,869,577


      Short-term
       investments                                                                   22,069                                            10,362


      Accounts receivable,
       net                                                                          691,589                                           689,134


      Other current assets                                                          330,521                                           302,880


      Assets held for sale                                                          152,188                                               663



                             Total current assets                                 5,981,417                                         2,872,616


      Property, plant and
       equipment, net                                                            12,663,827                                        12,152,597


      Operating lease right-
       of-use assets                                                              1,396,101                                         1,475,367



     Goodwill                                                                    5,016,350                                         4,781,858


      Intangible assets, net                                                      2,074,689                                         2,102,389


      Other assets                                                                  660,246                                           580,788



                             Total assets                                                     $
              
               27,792,630                             $
     
          23,965,615



                                       Liabilities and Stockholders' Equity


      Accounts payable and
       accrued expenses                                                                                       $
             745,517                                    $
        760,718


      Accrued property,
       plant and equipment                                                          335,013                                           301,535


      Current portion of
       operating lease
       liabilities                                                                  139,833                                           145,606


      Current portion of
       finance lease
       liabilities                                                                  102,416                                            75,239


      Current portion of
       mortgage and loans
       payable                                                                       75,589                                            77,603


      Current portion of
       senior notes                                                               2,227,768                                           643,224


      Other current
       liabilities                                                                  229,635                                           153,938


                             Total current
                              liabilities                                         3,855,771                                         2,157,863


      Operating lease
       liabilities, less
       current portion                                                            1,243,362                                         1,315,656


      Finance lease
       liabilities, less
       current portion                                                            1,658,432                                         1,430,882


      Mortgage and loans
       payable, less current
       portion                                                                    1,218,049                                         1,289,434


      Senior notes, less
       current portion                                                            8,804,633                                         8,309,673


      Other liabilities                                                             624,125                                           621,725



                             Total liabilities                                   17,404,372                                        15,125,233



      Common stock                                                                       89                                                86


      Additional paid-in
       capital                                                                   14,651,944                                        12,696,433


      Treasury stock                                                              (127,042)                                        (144,256)


      Accumulated dividends                                                     (4,639,041)                                      (4,168,469)


      Accumulated other
       comprehensive loss                                                       (1,140,291)                                        (934,613)


      Retained earnings                                                           1,642,621                                         1,391,425



                             Total Equinix
                              stockholders' equity                               10,388,280                                         8,840,606


      Non-controlling
       interests                                                                       (22)                                            (224)


                             Total stockholders'
                              equity                                             10,388,258                                         8,840,382


                                   Total liabilities and
                                    stockholders' equity                                      $
              
               27,792,630                             $
     
          23,965,615





      Ending headcount by geographic region is as
       follows:


                Americas headcount                                                    4,103                                             3,672


                EMEA headcount                                                        3,172                                             2,941


                Asia-Pacific
                 headcount                                                            1,906                                             1,765



                          Total headcount                                             9,181                                             8,378


                                 
           
                EQUINIX, INC.
                               
        Summary of Debt Principal Outstanding
                                   
                (in thousands)
                                    
                (unaudited)




                                    June 30, 2020                                    December 31, 2019

                                                                              ---



     Finance lease
      liabilities                                    $
              1,760,848                          $
      1,506,121





     Term loans                         1,214,332                          1,282,302


     Mortgage
      payable and
      other loans
      payable                              79,306                             84,735


     Plus: debt
      discount and
      issuance
      costs, net                            2,195                              3,081



                Total mortgage
                 and loans
                 payable
                 principal              1,295,833                          1,370,118





     Senior notes                      11,032,401                          8,952,897


     Plus: debt
      issuance costs                      108,519                             78,030


     Less: debt
      premium                               (745)                           (1,716)



               Total senior
                notes
                principal              11,140,175                          9,029,211





     Total debt
      principal
      outstanding                                   $
              14,196,856                         $
      11,905,450


                                                                                                                                                                                 
              
                EQUINIX, INC.
                                                                                                                                                                             
         Condensed Consolidated Statements of Cash Flows
                                                                                                                                                                                      
                (in thousands)
                                                                                                                                                                                        
                (unaudited)




                                                                                                                
              
                Three Months Ended                                                                         
     
             Six Months Ended


                                                                                          June 30,                                                                March 31,                              June 30,                           June 30,                                 June 30,
                                                                                              2020                                                        2020                                    2019                                 2020                                     2019






     Cash flows from operating activities:


             
              Net income                                                                                    $
              133,350                                             $
              118,957                                                            $
            143,852                                $
          252,307           $
         261,599


             
              Adjustments to reconcile net income to net cash provided by operating activities:


                        Depreciation, amortization and accretion                             348,434                                                       337,431                                             320,550                                                          685,865             635,255


             
              Stock-based compensation                                              75,844                                                        64,499                                              61,519                                                          140,343             110,542


                        Amortization of debt issuance costs and
                         debt discounts and premiums                                           4,444                                                         3,460                                               3,238                                                            7,904               6,233


             
              Loss on debt extinguishment                                            1,868                                                         6,441                                                                                                               8,309                 382


             
              (Gain) loss on asset sales                                             (342)                                                        1,199                                                                                                                 857


             
              Impairment charges                                                                                                                                                                       386                                                                              14,834


             
              Other items                                                           13,891                                                         6,856                                               4,745                                                           20,747              12,969


             
              Changes in operating assets and liabilities:


             
              Accounts receivable                                                 (29,539)                                                       15,306                                            (42,370)                                                        (14,233)          (126,720)


             
              Income taxes, net                                                      8,164                                                         3,697                                              14,837                                                           11,861              30,662


                        Accounts payable and accrued expenses                                    117                                                      (25,681)                                              7,476                                                         (25,564)            (3,987)


                        Operating lease right-of-use assets                                   37,495                                                        38,797                                              37,219                                                           76,292              78,483


             
              Operating lease liabilities                                         (36,898)                                                     (35,193)                                           (34,919)                                                        (72,091)           (73,805)


             
              Other assets and liabilities                                          17,858                                                      (18,939)                                             26,390                                                          (1,081)             17,617


                   Net cash provided by operating
                    activities                                                             574,686                                                       516,830                                             542,923                                                        1,091,516             964,064




     Cash flows from investing activities:


                        Purchases, sales and maturities of
                         investments, net                                                    (1,341)                                                     (38,940)                                            (3,063)                                                        (40,281)           (11,842)


                        Business acquisitions, net of cash and
                         restricted cash acquired                                                 39                                                     (478,287)                                            (34,143)                                                       (478,248)           (34,143)


             
              Purchases of real estate                                            (46,194)                                                     (36,373)                                           (41,715)                                                        (82,567)           (47,436)


                        Purchases of other property, plant and
                         equipment                                                         (481,948)                                                    (400,941)                                           (444,171)                                                        (882,889)          (808,138)


             
              Proceeds from asset sales


                   Net cash used in investing activities                                 (529,444)                                                    (954,541)                                           (523,092)                                                      (1,483,985)          (901,559)




     Cash flows from financing activities:


                        Proceeds from employee equity awards                                                                                               30,391                                                                                                              30,391              27,593


                        Payment of dividend distributions                                  (236,008)                                                    (233,479)                                           (208,449)                                                        (469,487)          (413,052)


                        Proceeds from public offering of common
                         stock, net of offering costs                                      1,683,106                                                       101,792                                             348,121                                                        1,784,898           1,561,555


                        Proceeds from mortgage and loans payable                             500,790                                                       250,000                                                                                                             750,790


                        Proceeds from senior notes, net of debt
                         discounts                                                         2,585,736                                                                                                                                                                        2,585,736


                        Repayment of finance lease liabilities                              (23,704)                                                     (18,977)                                           (11,954)                                                        (42,681)           (43,112)


                        Repayment of mortgage and loans payable                            (770,677)                                                     (18,501)                                           (17,878)                                                       (789,178)           (36,212)


             
              Repayment of senior notes                                          (150,000)                                                    (343,711)                                           (150,000)                                                        (493,711)          (150,000)


             
              Debt extinguishment costs                                                                                                         (4,619)                                                                                                            (4,619)


             
              Debt issuance costs                                                 (26,266)                                                                                                                                                                        (26,266)


                   Net cash provided by (used in)
                    financing activities                                                 3,562,977                                                     (237,104)                                            (40,160)                                                       3,325,873             946,772



      Effect of foreign currency exchange
       rates on cash, cash equivalents and
       restricted cash                                                                      12,411                                                      (25,287)                                              2,106                                                         (12,876)                411



      Net increase (decrease) in cash, cash
       equivalents and restricted cash                                                   3,620,630                                                     (700,102)                                            (18,223)                                                       2,920,528           1,009,688


      Cash, cash equivalents and restricted
       cash at beginning of period                                                       1,186,511                                                     1,886,613                                           1,655,515                                                        1,886,613             627,604



                   Cash, cash equivalents and restricted
                    cash at end of period                                                            $
              
                4,807,141                                     $
       
                1,186,511                                                   $
        
              1,637,292                       $
        
            4,807,141   $
       
           1,637,292




     Supplemental cash flow information:



     Cash paid for taxes                                                                                            $
              15,752                                              $
              45,324                                                             $
            32,669                                 $
          61,076            $
         59,693




     Cash paid for interest                                                                                        $
              122,669                                             $
              125,924                                                            $
            113,266                                $
          248,593           $
         259,410





                   Free cash flow (negative free cash
                    flow)(1)                                                                            $
              
                46,583                                     $
       
                (398,771)                                                     $
        
              22,894                       $
        
            (352,188)     $
       
           74,347





                   Adjusted free cash flow (2)                                                          $
              
                92,738                                       $
       
                115,889                                                      $
        
              98,752                         $
        
            208,627     $
       
           155,926






     (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                                                                           $
              574,686                                             $
              516,830                                                            $
            542,923                              $
          1,091,516           $
         964,064


                        Net cash used in investing activities as
                         presented above                                                   (529,444)                                                    (954,541)                                           (523,092)                                                      (1,483,985)          (901,559)


                        Purchases, sales and maturities of
                         investments, net                                                      1,341                                                        38,940                                               3,063                                                           40,281              11,842


                        Free cash flow (negative free cash flow)                                                       $
              46,583                                           $
              (398,771)                                                            $
            22,894                              $
          (352,188)           $
         74,347






     (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                                                                              $
              46,583                                           $
              (398,771)                                                            $
            22,894                              $
          (352,188)           $
         74,347


                        Less business acquisitions, net of cash
                         and restricted cash acquired                                           (39)                                                      478,287                                              34,143                                                          478,248              34,143


             
              Less purchases of real estate                                         46,194                                                        36,373                                              41,715                                                           82,567              47,436


             
              Adjusted free cash flow                                                                        $
              92,738                                             $
              115,889                                                             $
            98,752                                $
          208,627           $
         155,926


                                                                                                                                                                                          
              
                EQUINIX, INC.
                                                                                                                                                                                      
         Non-GAAP Measures and Other Supplemental Data
                                                                                                                                                                                               
                (in thousands)
                                                                                                                                                                                                
                (unaudited)




                                                                                                                       
              
                Three Months Ended                                                                         
     
              Six Months Ended


                                                                                            June 30, 2020                                                              March 31, 2020                                June 30, 2019                  June 30, 2020             June 30, 2019



             
      Recurring revenues                                                                                       $
              1,398,138                                                     $
              1,361,694                               $
              1,306,045                              $
          2,759,832          $
          2,580,873


             
      Non-recurring revenues                                                               71,983                                                          82,848                                                       78,932                              154,831            167,322



             
      Revenues (1)                                                                      1,470,121                                                       1,444,542                                                    1,384,977                            2,914,663          2,748,195





             
      Cash cost of revenues (2)                                                           480,946                                                         476,541                                                      460,983                              957,487            909,364



                             Cash gross profit (3)                                                  989,175                                                         968,001                                                      923,994                            1,957,176          1,838,831





                Cash operating expenses (4)(7):


                Cash sales and marketing expenses (5)                                               111,007                                                         115,671                                                       95,114                              226,678            203,330


                Cash general and administrative expenses (6)                                        158,127                                                         168,120                                                      151,870                              326,247            298,336



                             Total cash operating expenses (4)(7)                                   269,134                                                         283,791                                                      246,984                              552,925            501,666





             
      
                Adjusted EBITDA (8)                                                              $
              
                720,041                                          $
              
                684,210                      $
            
                677,010                     $
          
            1,404,251 $
          
            1,337,165





                             Cash gross margins (9)                                                      67                                                              67                                                           67                                   67                 67
                                                                                                          %                                                              %                                                           %                                   %                 %





                             Adjusted EBITDA margins(10)                                                 49                                                              47                                                           49                                   48                 49
                                                                                                          %                                                              %                                                           %                                   %                 %





                             Adjusted EBITDA flow-through rate (11)                                     140                                                              30                                                           77                                   53                 70
                                                                                                          %                                                              %                                                           %                                   %                 %





             
      
                FFO (12)                                                                         $
              
                356,946                                          $
              
                343,754                      $
            
                352,973                       $
          
            700,700   $
          
            679,046





             
      
                AFFO (13)(14)                                                                    $
              
                557,793                                          $
              
                534,705                      $
            
                497,647                     $
          
            1,092,498   $
          
            985,767





                             Basic FFO per share (15)                                                            $
              
                4.09                                             $
              
                4.02                         $
            
                4.18                          $
          
            8.11      $
          
            8.17





                             Diluted FFO per share (15)                                                          $
              
                4.06                                             $
              
                3.99                         $
            
                4.16                          $
          
            8.05      $
          
            8.14





                             Basic AFFO per share (15)                                                           $
              
                6.39                                             $
              
                6.25                         $
            
                5.90                         $
          
            12.64     $
          
            11.86





                             Diluted AFFO per share (15)                                                         $
              
                6.35                                             $
              
                6.21                         $
            
                5.87                         $
          
            12.55     $
          
            11.81





     
      (1)    The geographic split of our revenues on a services basis is presented below:




             
      
                Americas Revenues:




             
      Colocation                                                                                                 $
              447,498                                                       $
              450,954                                 $
              444,086                                $
          898,452            $
          884,067


             
      Interconnection                                                                     153,387                                                         150,929                                                      142,460                              304,316            281,023


             
      Managed infrastructure                                                               28,889                                                          25,529                                                       22,908                               54,418             44,695


             
      Other                                                                                 5,081                                                           5,220                                                        5,352                               10,301             11,331



             
      Recurring revenues                                                                  634,855                                                         632,632                                                      614,806                            1,267,487          1,221,116


             
      Non-recurring revenues                                                               26,564                                                          29,273                                                       29,614                               55,837             67,670



             
      Revenues                                                                                                   $
              661,419                                                       $
              661,905                                 $
              644,420                              $
          1,323,324          $
          1,288,786





             
      
                EMEA Revenues:




             
      Colocation                                                                                                 $
              381,144                                                       $
              362,330                                 $
              347,795                                $
          743,474            $
          678,920


             
      Interconnection                                                                      50,904                                                          48,541                                                       38,614                               99,445             76,139


             
      Managed infrastructure                                                               29,012                                                          30,137                                                       28,397                               59,149             57,485


             
      Other                                                                                 6,130                                                           2,466                                                        2,275                                8,596              4,774



             
      Recurring revenues                                                                  467,190                                                         443,474                                                      417,081                              910,664            817,318


             
      Non-recurring revenues                                                               20,900                                                          35,435                                                       32,774                               56,335             67,197



             
      Revenues                                                                                                   $
              488,090                                                       $
              478,909                                 $
              449,855                                $
          966,999            $
          884,515





                             Asia-Pacific Revenues:




             
      Colocation                                                                                                 $
              228,803                                                       $
              221,093                                 $
              213,734                                $
          449,896            $
          423,399


             
      Interconnection                                                                      45,140                                                          42,671                                                       37,957                               87,811             74,653


             
      Managed infrastructure                                                               22,150                                                          21,824                                                       22,467                               43,974             44,387



             
      Recurring revenues                                                                  296,093                                                         285,588                                                      274,158                              581,681            542,439


             
      Non-recurring revenues                                                               24,519                                                          18,140                                                       16,544                               42,659             32,455



             
      Revenues                                                                                                   $
              320,612                                                       $
              303,728                                 $
              290,702                                $
          624,340            $
          574,894





             
      
                Worldwide Revenues:




             
      Colocation                                                                                               $
              1,057,445                                                     $
              1,034,377                               $
              1,005,615                              $
          2,091,822          $
          1,986,386


             
      Interconnection                                                                     249,431                                                         242,141                                                      219,031                              491,572            431,815


             
      Managed infrastructure                                                               80,051                                                          77,490                                                       73,772                              157,541            146,567


             
      Other                                                                                11,211                                                           7,686                                                        7,627                               18,897             16,105



             
      Recurring revenues                                                                1,398,138                                                       1,361,694                                                    1,306,045                            2,759,832          2,580,873


             
      Non-recurring revenues                                                               71,983                                                          82,848                                                       78,932                              154,831            167,322


             
      Revenues                                                                                                 $
              1,470,121                                                     $
              1,444,542                               $
              1,384,977                              $
          2,914,663          $
          2,748,195





     
      (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                                                                                           $
              739,344                                                       $
              736,282                                 $
              698,179                              $
          1,475,626          $
          1,380,209


                Depreciation, amortization and accretion
                 expense                                                                          (250,743)                                                      (250,398)                                                   (230,696)                           (501,141)         (459,333)


             
      Stock-based compensation expense                                                    (7,655)                                                        (9,343)                                                     (6,500)                            (16,998)          (11,512)



             
      Cash cost of revenues                                                                                      $
              480,946                                                       $
              476,541                                 $
              460,983                                $
          957,487            $
          909,364





             
      The geographic split of our cash cost of revenues is presented below:




             
      Americas cash cost of revenues                                                                             $
              194,467                                                       $
              185,233                                 $
              182,920                                $
          379,700            $
          362,555


             
      EMEA cash cost of revenues                                                          177,558                                                         187,248                                                      179,347                              364,806            352,548


                Asia-Pacific cash cost of revenues                                                  108,921                                                         104,060                                                       98,716                              212,981            194,261



             
      Cash cost of revenues                                                                                      $
              480,946                                                       $
              476,541                                 $
              460,983                                $
          957,487            $
          909,364





     
      (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                                                               $
              435,014                                                       $
              442,047                                 $
              391,857                                $
          877,061            $
          776,618


                Depreciation and amortization expense                                              (97,691)                                                       (87,033)                                                    (89,854)                           (184,724)         (175,922)


             
      Stock-based compensation expense                                                   (68,189)                                                       (71,223)                                                    (55,019)                           (139,412)          (99,030)



             
      Cash operating expense                                                                                     $
              269,134                                                       $
              283,791                                 $
              246,984                                $
          552,925            $
          501,666





     
      (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                                                                                $
              178,124                                                       $
              180,450                                 $
              159,201                                $
          358,574            $
          328,916


                Depreciation and amortization expense                                              (48,902)                                                       (46,234)                                                    (48,930)                            (95,136)          (97,128)


             
      Stock-based compensation expense                                                   (18,215)                                                       (18,545)                                                    (15,157)                            (36,760)          (28,458)



             
      Cash sales and marketing expense                                                                           $
              111,007                                                       $
              115,671                                  $
              95,114                                $
          226,678            $
          203,330





     
      (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                                                                         $
              256,890                                                       $
              261,597                                 $
              232,656                                $
          518,487            $
          447,702


                Depreciation and amortization expense                                              (48,789)                                                       (40,799)                                                    (40,924)                            (89,588)          (78,794)


             
      Stock-based compensation expense                                                   (49,974)                                                       (52,678)                                                    (39,862)                           (102,652)          (70,572)



                Cash general and administrative expense                                                                    $
              158,127                                                       $
              168,120                                 $
              151,870                                $
          326,247            $
          298,336





     
      (7) 
      The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below:




             
      Americas cash SG&A                                                                                         $
              164,845                                                       $
              183,059                                 $
              152,448                                $
          347,904            $
          309,341


             
      EMEA cash SG&A                                                                       66,935                                                          61,503                                                       60,863                              128,438            123,250


             
      Asia-Pacific cash SG&A                                                               37,354                                                          39,229                                                       33,673                               76,583             69,075



             
      Cash SG&A                                                                                                  $
              269,134                                                       $
              283,791                                 $
              246,984                                $
          552,925            $
          501,666





     
      (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                                                                                     $
              282,488                                                       $
              253,484                                 $
              291,781                                $
          535,972            $
          571,289


                Depreciation, amortization and accretion
                 expense                                                                            348,434                                                         337,431                                                      320,550                              685,865            635,255


             
      Stock-based compensation expense                                                     75,844                                                          80,566                                                       61,519                              156,410            110,542


             
      Impairment charges                                                                                                                                                                                                 386                                                 14,834


             
      Transaction costs                                                                    13,617                                                          11,530                                                        2,774                               25,147              5,245


             
      (Gain) loss on asset sales                                                            (342)                                                          1,199                                                                                              857



             
      Adjusted EBITDA                                                                                            $
              720,041                                                       $
              684,210                                 $
              677,010                              $
          1,404,251          $
          1,337,165





             
      The geographic split of our adjusted EBITDA is presented below:




             
      Americas income from operations                                                                             $
              58,423                                                        $
              47,308                                  $
              99,195                                $
          105,731            $
          189,206


                Americas depreciation, amortization and
                 accretion expense                                                                  182,204                                                         171,439                                                      167,614                              353,643            334,750


                Americas stock-based compensation expense                                            56,326                                                          62,689                                                       42,676                              119,015             76,847


             
      Americas impairment charges                                                                                                                                                                                        386                                                 14,834


             
      Americas transaction costs                                                            5,575                                                          10,978                                                        (819)                              16,553              1,253


                Americas (gain) loss on asset sales                                                   (421)                                                          1,199                                                                                              778



             
      Americas adjusted EBITDA                                                                                   $
              302,107                                                       $
              293,613                                 $
              309,052                                $
          595,720            $
          616,890





             
      EMEA income from operations                                                                                $
              138,154                                                       $
              126,004                                 $
              106,555                                $
          264,158            $
          211,562


                EMEA depreciation, amortization and
                 accretion expense                                                                   92,953                                                          92,740                                                       88,109                              185,693            172,656


                EMEA stock-based compensation expense                                                12,240                                                          11,002                                                       11,353                               23,242             20,216


             
      EMEA transaction costs                                                                  171                                                             412                                                        3,628                                  583              4,283


             
      EMEA loss on asset sales                                                                 79                                                                                                                                                              79



             
      EMEA adjusted EBITDA                                                                                       $
              243,597                                                       $
              230,158                                 $
              209,645                                $
          473,755            $
          408,717





                Asia-Pacific income from operations                                                                         $
              85,911                                                        $
              80,172                                  $
              86,031                                $
          166,083            $
          170,521


                Asia-Pacific depreciation, amortization and
                 accretion expense                                                                   73,277                                                          73,252                                                       64,827                              146,529            127,849


                Asia-Pacific stock-based compensation
                 expense                                                                              7,278                                                           6,875                                                        7,490                               14,153             13,479


             
      Asia-Pacific transaction costs                                                        7,871                                                             140                                                         (35)                               8,011              (291)


             
      Asia-Pacific adjusted EBITDA                                                                               $
              174,337                                                       $
              160,439                                 $
              158,313                                $
          334,776            $
          311,558





     
      (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                                                    71
            %                                                   72
            %                                                72
            %                        71
            %      72
            %



             
      EMEA cash gross margins                                                        64
            %                                                   61
            %                                                60
            %                        62
            %      60
            %



             
      Asia-Pacific cash gross margins                                                66
            %                                                   66
            %                                                66
            %                        66
            %      66
            %






      (10) 
      We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.




             
      Americas adjusted EBITDA margins                                               46
            %                                                   44
            %                                                48
            %                        45
            %      48
            %



             
      EMEA adjusted EBITDA margins                                                   50
            %                                                   48
            %                                                47
            %                        49
            %      46
            %



                Asia-Pacific adjusted EBITDA margins                                           54
            %                                                   53
            %                                                54
            %                        54
            %      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                                                                           $
              720,041                                                       $
              684,210                                 $
              677,010                              $
          1,404,251          $
          1,337,165


                Less adjusted EBITDA -prior period                                                (684,210)                                                      (675,860)                                                   (660,155)                         (1,350,562)       (1,229,721)



             
      Adjusted EBITDA growth                                                                                      $
              35,831                                                         $
              8,350                                  $
              16,855                                 $
          53,689            $
          107,444





             
      Revenues - current period                                                                                $
              1,470,121                                                     $
              1,444,542                               $
              1,384,977                              $
          2,914,663          $
          2,748,195


             
      Less revenues - prior period                                                    (1,444,542)                                                    (1,417,135)                                                 (1,363,218)                         (2,813,945)       (2,593,834)



             
      Revenue growth                                                                                              $
              25,579                                                        $
              27,407                                  $
              21,759                                $
          100,718            $
          154,361





             
      Adjusted EBITDA flow-through rate                                             140
            %                                                   30
            %                                                77
            %                        53
            %      70
            %






      (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                                                                                                 $
              133,350                                                       $
              118,957                                 $
              143,852                                $
          252,307            $
          261,599


                Net (income) loss attributable to non-
                 controlling interests                                                                 (46)                                                          (165)                                                       (325)                               (211)                 6



                Net income attributable to Equinix                                                  133,304                                                         118,792                                                      143,527                              252,096            261,605


             
      Adjustments:


             
      Real estate depreciation                                                            222,613                                                         221,787                                                      209,103                              444,400            414,752


                (Gain) loss on disposition of real estate
                 property                                                                               376                                                           2,506                                                          343                                2,882              2,689


                Adjustments for FFO from unconsolidated
                 joint ventures                                                                         653                                                             669                                                                                            1,322



                FFO attributable to common shareholders                                                                    $
              356,946                                                       $
              343,754                                 $
              352,973                                $
          700,700            $
          679,046








      (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                                                                    $
              356,946                                                       $
              343,754                                 $
              352,973                                $
          700,700            $
          679,046


             
      Adjustments:


             
      Installation revenue adjustment                                                       3,649                                                         (3,481)                                                       1,492                                  168              2,521


                Straight-line rent expense adjustment                                                 2,395                                                           1,806                                                        2,300                                4,201              4,678


                Amortization of deferred financing costs and
                 debt discounts and premiums                                                          4,444                                                           3,460                                                        3,238                                7,904              6,233


             
      Contract cost adjustment                                                            (5,307)                                                       (10,434)                                                    (12,348)                            (15,741)          (19,126)


             
      Stock-based compensation expense                                                     75,844                                                          80,566                                                       61,519                              156,410            110,542


                Non-real estate depreciation expense                                                 76,618                                                          65,591                                                       60,904                              142,209            118,898


             
      Amortization expense                                                                 49,362                                                          48,491                                                       49,217                               97,853             98,752


             
      Accretion expense (adjustment)                                                        (159)                                                          1,562                                                        1,326                                1,403              2,853


             
      Recurring capital expenditures                                                     (29,996)                                                       (17,868)                                                    (36,726)                            (47,864)          (57,673)


             
      Loss on debt extinguishment                                                           1,868                                                           6,441                                                                                            8,309                382


             
      Transaction costs                                                                    13,617                                                          11,530                                                        2,774                               25,147              5,245


             
      Impairment charges                                                                                                                                                                                                 386                                                 14,834


             
      Income tax expense adjustment                                                         8,070                                                           2,833                                                       10,592                               10,903             18,582


                Adjustments for AFFO from unconsolidated
                 joint ventures                                                                         442                                                             454                                                                                              896



                AFFO attributable to common shareholders                                                                   $
              557,793                                                       $
              534,705                                 $
              497,647                              $
          1,092,498            $
          985,767






      (14) 
       Following is how we reconcile from adjusted EBITDA to AFFO:




             
      Adjusted EBITDA                                                                                            $
              720,041                                                       $
              684,210                                 $
              677,010                              $
          1,404,251          $
          1,337,165


             
      Adjustments:


                Interest expense, net of interest income                                          (106,795)                                                      (103,065)                                                   (112,785)                           (209,860)         (231,429)


                Amortization of deferred financing costs and
                 debt discounts and premiums                                                          4,444                                                           3,460                                                        3,238                                7,904              6,233


             
      Income tax expense                                                                 (44,753)                                                       (30,191)                                                    (47,324)                            (74,944)          (89,893)


             
      Income tax expense adjustment                                                         8,070                                                           2,833                                                       10,592                               10,903             18,582


                Straight-line rent expense adjustment                                                 2,395                                                           1,806                                                        2,300                                4,201              4,678


             
      Contract cost adjustment                                                            (5,307)                                                       (10,434)                                                    (12,348)                            (15,741)          (19,126)


             
      Installation revenue adjustment                                                       3,649                                                         (3,481)                                                       1,492                                  168              2,521


             
      Recurring capital expenditures                                                     (29,996)                                                       (17,868)                                                    (36,726)                            (47,864)          (57,673)


             
      Other income (expense)                                                                4,278                                                           5,170                                                       12,180                                9,448             12,014


                (Gain) loss on disposition of real estate
                 property                                                                               376                                                           2,506                                                          343                                2,882              2,689


                Adjustments for unconsolidated JVs' and non-
                 controlling interests                                                                1,049                                                             958                                                        (325)                               2,007                  6


                Adjustment for gain (loss) on asset sales                                               342                                                         (1,199)                                                                                           (857)


                AFFO attributable to common shareholders                                                                   $
              557,793                                                       $
              534,705                                 $
              497,647                              $
          1,092,498            $
          985,767






      (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                                         87,303                                                          85,551                                                       84,399                               86,427             83,114


                Effect of dilutive securities:


             
      Employee equity awards                                                                  598                                                             593                                                          368                                  638                357



                Shares used in computing diluted net income
                 per share, FFO per share and AFFO per share                                         87,901                                                          86,144                                                       84,767                               87,065             83,471





             
      Basic FFO per share                                                                                           $
              4.09                                                          $
              4.02                                    $
              4.18                                   $
          8.11               $
          8.17



             
      Diluted FFO per share                                                                                         $
              4.06                                                          $
              3.99                                    $
              4.16                                   $
          8.05               $
          8.14





             
      Basic AFFO per share                                                                                          $
              6.39                                                          $
              6.25                                    $
              5.90                                  $
          12.64              $
          11.86



             
      Diluted AFFO per share                                                                                        $
              6.35                                                          $
              6.21                                    $
              5.87                                  $
          12.55              $
          11.81

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SOURCE Equinix, Inc.