Equinix Reports Fourth Quarter And Full Year 2020 Results
REDWOOD CITY, Calif., Feb. 10, 2021 /PRNewswire/ --
-- 2020 annual revenues increased 8% year-over-year on both an as-reported
and normalized and constant currency basis to approximately $6 billion.
This represents the company's 72(nd) consecutive quarter of revenue
growth
-- Delivered record channel bookings in Q4, accounting for more than 35% of
total bookings
-- Continues to expand platform, building across 44 projects in 30 markets
and 20 countries
Equinix, Inc. (Nasdaq: EQIX), the world's digital infrastructure company, today reported results for the quarter and year ended December 31, 2020. Equinix uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements. All per share results are presented on a fully diluted basis.
2020 Results Summary
-- Revenues
-- $5.999 billion, an 8% increase over the previous year on both an
as-reported and normalized and constant currency basis
-- Operating Income
-- $1.053 billion, a 10% decrease from the previous year, and an
operating margin of 18%, in part due to increased acquisition costs
and the prior year's gain on sale of assets contributed to the EMEA
joint venture
-- Adjusted EBITDA
-- $2.853 billion, a 48% adjusted EBITDA margin
-- Includes $17 million of integration costs
-- Net Income and Net Income per Share attributable to Equinix
-- $370 million, a 27% decrease from the previous year, primarily due
to acquisition costs and losses on debt extinguishment related to
balance sheet refinancing initiatives
-- $4.18 per share, a 30% decrease from the previous year
-- AFFO and AFFO per Share
-- $2.189 billion, a 13% increase over the previous year or 18% on a
normalized and constant currency basis
-- $24.76 per share, a 9% increase over the previous year or 12% on a
normalized and constant currency basis
-- Includes $17 million of integration costs
2021 Annual Guidance Summary
-- Revenues
-- $6.580 - $6.640 billion, a 10 - 11% increase over the previous year
or a normalized and constant currency increase of 7 - 8%
-- Adjusted EBITDA
-- $3.067 - $3.127 billion, a 47% adjusted EBITDA margin
-- Includes operational efficiencies offset by investment in new
products and services, including xScale(TM), scaling the business
and expansion drag
-- Assumes $30 million of integration costs
-- AFFO and AFFO per Share
-- $2.413 - $2.463 billion, an increase of 10 - 12% over the previous
year or a normalized and constant currency increase of 9 - 11%
-- $26.72 - $27.28 per share, an increase of 8 - 10% over the previous
year on both an as-reported and normalized and constant currency
basis. This guidance excludes any capital market activities the
company may undertake in the future
-- Assumes $30 million of integration costs
Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income (loss) from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant.
Quote
Charles Meyers, President and CEO, Equinix:
"While 2020 brought about a landscape of challenges and change, Equinix continued to innovate and adapt, serving as a trusted partner to our customers on their digital transformation journey. We continued to extend our market leadership, delivering approximately $6 billion of revenue and driving healthy growth both on the top-line and at the per-share level. As we look ahead, I am as optimistic as ever about our business and the expanding opportunity to serve our customers, partners and shareholders as the world's digital infrastructure company."
Business Highlights
-- Equinix continues to invest in its platform services, introducing new
product capabilities and expanding market availability, helping to lower
the barriers to entry and improving the value of digital transformation
for new and existing customers:
-- On October 6, Equinix launched the availability of Equinix
Metal(TM), a fully automated and interconnected Bare Metal as a
Service offering. Today, Equinix Metal is available in eight global
metros and is expected to be available in 18 global metros in early
2021.
-- On December 8, Equinix introduced transformative capabilities on
Equinix Fabric(TM) and Network Edge, which ease the way enterprises
connect their digital infrastructure. With these new capabilities,
Equinix Fabric now has native integration built into both Network
Edge and Equinix Metal over the Equinix platform and is available in
49 strategic metros across five continents.
-- Equinix continued to expand the reach of its global platform and
operates across 63 metros in 26 countries. In 2020, Equinix completed 16
new expansions, its most active build year ever, with a sizeable
expansion roadmap planned for 2021 to meet growing customer demand. New
expansions planned in 2021 include the Geneva, Genoa, Madrid,
Manchester, Muscat, New York and Osaka metros, with 44 large projects
underway across 30 markets and 20 countries.
-- Interconnection revenues grew 14% year-over-year on a normalized and
constant currency basis driven by strong customer adoption of Equinix
Fabric, good traction in internet exchange markets and solid
interconnection net adds. Today, Equinix has the most comprehensive
global interconnection platform, now comprising over 392,000 physical
and virtual interconnections. In Q4, Equinix added 7,700
interconnections, more interconnections than its next 15 competitors
combined, driven by continued strength in network and cloud
connectivity. Equinix Internet Exchange(®) experienced peak traffic, up
8% quarter-over-quarter and 43% year-over-year, driven by cloud, content
and gaming segments.
-- In Q4, the Network vertical achieved record bookings, driven by telecom
carriers upgrading their core and edges to address the shifting traffic
patterns resulting from the pandemic, as well as continued strength in
enterprise resale. The Financial Services vertical also achieved a
record quarter, led by wins and expansions with multinational financial
services companies, with particular strength in the Americas region,
including the greater New York City metro.
-- Equinix continues its indirect selling initiatives, as the company
pursues high-value strategic channel partnerships. In Q4, channel
activity accounted for approximately 35% of bookings. Strength was
driven by Equinix's hyperscale and technology alliance partners, with
wins across a wide range of industry segments with projects focused on
digital transformation efforts, as well as COVID-19 pandemic responses.
-- Equinix continues to make significant progress with the company's
hyperscale strategy with eight projects currently underway across all
three regions and a strong pipeline of customer demand. In Q4, Equinix
completed the formation of another greater than US$1.0 billion joint
venture in the form of a limited liability partnership with GIC,
Singapore's sovereign wealth fund, to develop and operate xScale(TM)
data centers in Japan.
COVID-19 Update
Many of Equinix's International Business Exchange(TM) (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 during the COVID-19 pandemic 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 and 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 IBX data centers. For the health and safety of Equinix employees, the company's corporate offices were closed in March 2020, and non-IBX employees across the globe were instructed to work from home until further notice. A phased plan has been announced for a return-to-office for non-IBX attached sites, and the company has been following this plan to open certain offices with occupancy limits 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 global events in response to the COVID-19 pandemic.
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 the COVID-19 pandemic on Equinix and the company's response thereto will be provided in the upcoming Form 10-K for the year ended December 31, 2020.
Business Outlook
For the first quarter of 2021, Equinix expects revenues to range between $1.587 and $1.607 billion, an increase of 2% quarter-over-quarter at the midpoint or approximately 1% on a normalized and constant currency basis, including a step-down in non-recurring revenue due to timing of customer installations. This guidance includes a foreign currency benefit of $17 million when compared to the average FX rates in Q4 2020. Adjusted EBITDA is expected to range between $737 and $757 million, which includes a $9 million foreign currency benefit when compared to the average FX rates in Q4 2020, and higher seasonal salary and benefit costs of $14 million attributed to the FICA reset. Adjusted EBITDA includes $9 million of integration costs related to acquisitions. Recurring capital expenditures are expected to range between $17 and $27 million.
For the full year of 2021, total revenues are expected to range between $6.580 and $6.640 billion, a 10 - 11% increase over the previous year, or a normalized and constant currency increase of 7 - 8%. This guidance includes a foreign currency benefit of $106 million when compared to the average FX rates in 2020. Adjusted EBITDA is expected to range between $3.067 and $3.127 billion, an adjusted EBITDA margin of 47%. This adjusted EBITDA includes the impact from strategic investments and a foreign currency benefit of $56 million when compared to the average FX rates in 2020. For the year, the company expects to incur $30 million in integration costs related to acquisitions. AFFO is expected to range between $2.413 and $2.463 billion, an increase of 10 - 12% over the previous year, or a normalized and constant currency increase of 9 - 11%. This AFFO guidance includes $30 million in integration costs related to acquisitions. AFFO per share is expected to range between $26.72 and $27.28, an increase of 8 - 10% over the previous year on both an as-reported and normalized and constant currency basis. This guidance excludes any capital market activities the company may undertake in the future. Non-recurring capital expenditures, excluding xScale-related costs, are expected to range between $2.125 and $2.315 billion and recurring capital expenditures are expected to approximate $180 million. xScale capital expenditures are expected to approximate $250 million.
The U.S. dollar exchange rates used for 2021 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.19 to the Euro, $1.33 to the Pound, S$1.32 to the U.S. dollar, ¥103 to the U.S. dollar and R$5.19 to the U.S. dollar. The Q4 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.
Q4 2020 Results Conference Call and Replay Information
Equinix will discuss its quarterly results for the period ended December 31, 2020, along with its future outlook, in its quarterly conference call on Wednesday, February 10, 2021, 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, April 28, 2021, by dialing 1-203-369-1057 and entering passcode (2021). In addition, the webcast will be available on the company's website at www.equinix.com/investors (no password required).
Investor Presentation and Supplemental Financial Information
Equinix has made available on its website a presentation designed to accompany the discussion of Equinix's results and future outlook, along with certain supplemental financial information and other data. Interested parties may access this information through the Equinix Investor Relations website at www.equinix.com/investors.
Additional Resources
-- Equinix Investor Relations Resources
About Equinix
Equinix (Nasdaq: EQIX) is the world's digital infrastructure company, enabling digital leaders to harness a trusted platform to bring together and interconnect the foundational infrastructure that powers their success. Equinix enables today's businesses to access all the right places, partners and possibilities they need to accelerate advantage. With Equinix, they can scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value.
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. Additionally, Equinix presents AFFO per share, which is also commonly used in the REIT industry. AFFO per share offers investors and industry analysts a perspective of Equinix's underlying operating performance when compared to other REIT companies. 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
Twelve Months Ended
---
December 31, September 30, December 31, December 31, December 31,
2020 2020 2019 2020 2019
---
Recurring revenues $
1,466,126 $
1,432,072 $
1,337,977 $
5,658,030 $
5,238,186
Non-recurring revenues 97,989 87,695 79,158 340,515 323,954
Revenues 1,564,115 1,519,767 1,417,135 5,998,545 5,562,140
Cost of revenues 830,735 767,979 725,636 3,074,340 2,810,184
Gross profit 733,380 751,788 691,499 2,924,205 2,751,956
Operating expenses:
Sales and marketing 187,055 172,727 160,556 718,356 651,046
General and administrative 293,144 279,350 245,504 1,090,981 935,018
Transaction costs 24,948 5,840 16,545 55,935 24,781
Impairment charges - 7,306 (233) 7,306 15,790
Gain on asset sales (373) (1,785) (43,847) (1,301) (44,310)
Total operating expenses 504,774 463,438 378,525 1,871,277 1,582,325
Income from operations 228,606 288,350 312,974 1,052,928 1,169,631
Interest and other income (expense):
Interest income 1,244 1,452 7,532 8,654 27,697
Interest expense (90,912) (99,736) (117,617) (406,466) (479,684)
Other income (expense) (2,697) 162 12,336 6,913 27,778
Loss on debt extinguishment (44,001) (93,494) (52,758) (145,804) (52,825)
Total interest and other,
net (136,366) (191,616) (150,507) (536,703) (477,034)
Income before income taxes 92,240 96,734 162,467 516,225 692,597
Income tax expense (41,304) (29,903) (37,632) (146,151) (185,352)
Net income 50,936 66,831 124,835 370,074 507,245
Net (income) loss
attributable to non-
controlling interests 58 (144) 160 (297) 205
Net income attributable to
Equinix $
50,994 $
66,687 $
124,995 $
369,777 $
507,450
Net income per share attributable to Equinix:
Basic net income per share $
0.57 $
0.75 $
1.47 $
4.22 $
6.03
Diluted net income per share $
0.57 $
0.74 $
1.46 $
4.18 $
5.99
Shares used in computing
basic net income per share 89,113 88,806 85,289 87,700 84,140
Shares used in computing
diluted net income per
share 89,726 89,519 85,831 88,410 84,679
EQUINIX, INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2020 2020 2019 2020 2019
---
Net income $
50,936 $
66,831 $
124,835 $
370,074 $
507,245
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment
("CTA") gain (loss) 481,625 299,441 283,185 548,560 (58,334)
Unrealized loss on cash flow hedges (27,824) (33,842) (22,928) (82,790) (3,842)
Net investment hedge CTA gain (loss) (265,340) (227,101) (154,596) (444,553) 73,294
Net actuarial gain (loss) on defined
benefit plans 8 22 (22) 85 (48)
Total other comprehensive income, net of
tax 188,469 38,520 105,639 21,302 11,070
Comprehensive income, net of tax 239,405 105,351 230,474 391,376 518,315
Net (income) loss attributable to non-
controlling interests 58 (144) 160 (297) 205
Other comprehensive (income) loss
attributable to non-controlling
interests (36) (30) (16) (57) 19
Comprehensive income attributable to
Equinix $
239,427 $
105,177 $
230,618 $
391,022 $
518,539
EQUINIX, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, 2020 December 31, 2019
---
Assets
Cash and cash equivalents $
1,604,869 $
1,869,577
Short-term investments 4,532 10,362
Accounts receivable, net 676,738 689,134
Other current assets 355,016 303,543
Total current assets 2,641,155 2,872,616
Property, plant and equipment, net 14,503,084 12,152,597
Operating lease right-of-use assets 1,475,057 1,475,367
Goodwill 5,472,553 4,781,858
Intangible assets, net 2,170,945 2,102,389
Other assets 776,047 580,788
Total assets $
27,038,841 $
23,965,615
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $
876,862 $
760,718
Accrued property, plant and equipment 301,155 301,535
Current portion of operating lease
liabilities 154,207 145,606
Current portion of finance lease
liabilities 137,683 75,239
Current portion of mortgage and loans
payable 82,289 77,603
Current portion of senior notes 150,186 643,224
Other current liabilities 354,368 153,938
Total current liabilities 2,056,750 2,157,863
Operating lease liabilities, less current
portion 1,308,627 1,315,656
Finance lease liabilities, less current
portion 1,784,816 1,430,882
Mortgage and loans payable, less current
portion 1,287,254 1,289,434
Senior notes, less current portion 9,018,277 8,309,673
Other liabilities 948,999 621,725
Total liabilities 16,404,723 15,125,233
Common stock 89 86
Additional paid-in capital 15,028,357 12,696,433
Treasury stock (122,118) (144,256)
Accumulated dividends (5,119,274) (4,168,469)
Accumulated other comprehensive loss (913,368) (934,613)
Retained earnings 1,760,302 1,391,425
Total Equinix stockholders' equity 10,633,988 8,840,606
Non-controlling interests 130 (224)
Total stockholders' equity 10,634,118 8,840,382
Total liabilities and stockholders'
equity $
27,038,841 $
23,965,615
Ending headcount by geographic region is as follows:
Americas headcount 4,599 3,672
EMEA headcount 3,405 2,941
Asia-Pacific headcount 2,009 1,765
Total headcount 10,013 8,378
EQUINIX, INC.
Summary of Debt Principal Outstanding
(in thousands)
(unaudited)
December 31, 2020 December 31, 2019
---
Finance lease liabilities $
1,922,499 $
1,506,121
Term loans 1,288,779 1,282,302
Mortgage payable and
other loans payable 80,764 84,735
Plus: debt discount and
issuance costs, net 1,427 3,081
Total mortgage and loans
payable principal 1,370,970 1,370,118
Senior notes 9,168,463 8,952,897
Plus: debt issuance costs 92,773 78,030
Less: debt premium (186) (1,716)
Total senior notes
principal 9,261,050 9,029,211
Total debt principal
outstanding $
12,554,519 $
11,905,450
EQUINIX, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2020 2020 2019 2020 2019
Cash flows from operating activities:
Net income $
50,936 $
66,831 $
124,835 $
370,074 $
507,245
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 378,859 362,286 328,295 1,427,010 1,285,296
Stock-based compensation 79,361 75,248 62,126 294,952 236,539
Amortization of debt issuance costs and
debt discounts and premiums 3,951 3,884 3,613 15,739 13,042
Loss on debt extinguishment 44,001 93,494 52,758 145,804 52,825
Gain on asset sales (373) (1,785) (43,847) (1,301) (44,310)
Impairment charges 7,306 (233) 7,306 15,790
Other items (158) (2,518) 3,831 18,071 19,620
Changes in operating assets and liabilities:
Accounts receivable 63,516 (23,871) 96,480 25,412 (26,909)
Income taxes, net (2,448) (32,054) (40,649) (22,641) 32,495
Accounts payable and accrued expenses 21,955 61,410 (34,588) 57,801 (27,928)
Operating lease right-of-use assets 39,039 38,319 40,805 153,650 149,031
Operating lease liabilities (35,472) (35,300) (40,032) (142,863) (152,091)
Other assets and liabilities 42,981 (81,088) (23,724) (39,188) (67,917)
Net cash provided by operating
activities 686,148 532,162 529,670 2,309,826 1,992,728
Cash flows from investing activities:
Purchases, sales and maturities of
investments, net (62,099) 3,969 (5,776) (98,411) (20,523)
Business acquisitions, net of cash and
restricted cash acquired (702,024) (1,180,272) (34,143)
Purchases of real estate (75,720) (41,895) (104,865) (200,182) (169,153)
Purchases of other property, plant and
equipment (834,330) (565,285) (714,561) (2,282,504) (2,079,521)
Proceeds from asset sales 334,397 358,656 334,397 358,773
Net cash used in investing activities (1,339,776) (603,211) (466,546) (3,426,972) (1,944,567)
Cash flows from financing activities:
Proceeds from employee equity awards 31,727 62,118 52,018
Payment of dividend distributions (237,756) (240,690) (210,360) (947,933) (836,164)
Proceeds from public offering of common
stock, net of offering costs 196,477 1,981,375 1,660,976
Proceeds from loans payable 750,790
Proceeds from senior notes, net of debt
discounts 1,845,891 2,797,906 4,431,627 2,797,906
Repayment of finance lease liabilities (40,842) (31,765) (63,701) (115,288) (126,486)
Repayment of mortgage and loans payable (20,857) (19,431) (19,431) (829,466) (73,227)
Repayment of senior notes (1,923,000) (1,947,050) (2,056,289) (4,363,761) (2,206,289)
Debt extinguishment costs (29,296) (77,785) (43,311) (111,700) (43,311)
Debt issuance costs (15,970) (23,341) (42,236) (23,341)
Other financing activities
Net cash provided by (used in) financing
activities (421,830) (2,088,517) 381,473 815,526 1,202,082
Effect of foreign currency exchange
rates on cash, cash equivalents and
restricted cash 35,065 18,513 21,883 40,702 8,766
Net increase (decrease) in cash, cash
equivalents and restricted cash (1,040,393) (2,141,053) 466,480 (260,918) 1,259,009
Cash, cash equivalents and restricted
cash at beginning of period 2,666,088 4,807,141 1,420,133 1,886,613 627,604
Cash, cash equivalents and restricted
cash at end of period $
1,625,695 $
2,666,088 $
1,886,613 $
1,625,695 $
1,886,613
Supplemental cash flow information:
Cash paid for taxes $
27,385 $
55,473 $
47,507 $
143,934 $
136,583
Cash paid for interest $
132,034 $
115,174 $
141,140 $
498,408 $
553,815
Free cash flow (negative free cash flow)
(1) $
(591,529) $
(75,018) $
68,900 $
(1,018,735) $
68,684
Adjusted free cash flow (adjusted
negative free cash flow) (2) $
186,215 $
(33,123) $
173,765 $
361,719 $
271,980
(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 $
686,148 $
532,162 $
529,670 $
2,309,826 $
1,992,728
Net cash used in investing activities as
presented above (1,339,776) (603,211) (466,546) (3,426,972) (1,944,567)
Purchases, sales and maturities of
investments, net 62,099 (3,969) 5,776 98,411 20,523
Free cash flow (negative free cash flow) $
(591,529) $
(75,018) $
68,900 $
(1,018,735) $
68,684
(2) We define adjusted free cash flow (adjusted negative free cash flow) as free cash flow (negative free cash flow) as defined
above, excluding any purchases of real estate and business acquisitions, net of cash and restricted cash acquired as presented
below:
Free cash flow (negative free cash flow) as
defined above) $
(591,529) $
(75,018) $
68,900 $
(1,018,735) $
68,684
Less business acquisitions, net of cash and
restricted cash acquired 702,024 1,180,272 34,143
Less purchases of real estate 75,720 41,895 104,865 200,182 169,153
Adjusted free cash flow (adjusted negative
free cash flow) $
186,215 $
(33,123) $
173,765 $
361,719 $
271,980
EQUINIX, INC.
Non-GAAP Measures and Other Supplemental Data
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2020 2020 2019 2020
2019
Recurring revenues $
1,466,126 $
1,432,072 $
1,337,977 $
5,658,030 $
5,238,186
Non-recurring revenues 97,989 87,695 79,158 340,515 323,954
Revenues (1) 1,564,115 1,519,767 1,417,135 5,998,545 5,562,140
Cash cost of revenues (2) 539,667 494,187 477,144 1,991,341 1,851,458
Cash gross profit (3) 1,024,448 1,025,580 939,991 4,007,204 3,710,682
Cash operating expenses (4)(7):
Cash sales and marketing expenses (5) 119,805 106,317 100,430 452,800 401,877
Cash general and administrative 193,241 182,018 163,701 701,506 621,078
expenses (6)
Total cash operating expenses (4)(7) 313,046 288,335 264,131 1,154,306 1,022,955
Adjusted EBITDA (8) $
711,402 $
737,245 $
675,860 $
2,852,898 $
2,687,727
Cash gross margins (9) 65% 67% 66% 67% 67%
Adjusted EBITDA 45% 49% 48% 48% 48%
margins (10)
Adjusted EBITDA flow-through rate (11) (58)% 35% 6% 38% 56%
FFO (12) $
301,747 $
298,183 $
304,025 $
1,300,630 $
1,314,556
AFFO (13) (14) $
516,965 $
579,682 $
472,611 $
2,189,145 $
1,931,122
Basic FFO per share (15) $
3.39 $
3.36 $
3.56 $
14.83 $
15.62
Diluted FFO per share (15) $
3.36 $
3.33 $
3.54 $
14.71 $
15.52
Basic AFFO per share (15) $
5.80 $
6.53 $
5.54 $
24.96 $
22.95
Diluted AFFO per share(15) $
5.76 $
6.48 $
5.51 $
24.76 $
22.81
(1) The geographic split of our revenues on a services basis is presented below:
Americas Revenues:
Colocation $
472,227 $
450,030 $
443,991 $
1,820,709 $
1,769,654
Interconnection 161,334 156,677 149,474 622,327 576,709
Managed infrastructure 36,787 28,954 21,485 120,159 90,262
Other 5,393 3,911 5,020 19,605 19,743
Recurring revenues 675,741 639,572 619,970 2,582,800 2,456,368
Non-recurring revenues 36,361 32,760 33,696 124,958 131,359
Revenues $
712,102 $
672,332 $
653,666 $
2,707,758 $
2,587,727
EMEA Revenues:
Colocation $
369,523 $
391,773 $
359,423 $
1,504,770 $
1,395,544
Interconnection 58,345 55,700 44,350 213,490 161,552
Managed infrastructure 37,883 30,690 28,495 127,722 113,631
Other 4,561 5,581 3,458 18,738 10,019
Recurring revenues 470,312 483,744 435,726 1,864,720 1,680,746
Non-recurring revenues 40,995 34,339 28,063 131,669 125,698
Revenues $
511,307 $
518,083 $
463,789 $
1,996,389 $
1,806,444
Asia-Pacific Revenues:
Colocation $
246,864 $
236,762 $
219,306 $
933,522 $
857,009
Interconnection 51,065 48,565 41,180 187,441 155,328
Managed infrastructure 22,876 22,614 21,795 89,464 88,735
Other (732) 815 83 -
Recurring revenues 320,073 308,756 282,281 1,210,510 1,101,072
Non-recurring revenues 20,633 20,596 17,399 83,888 66,897
Revenues $
340,706 $
329,352 $
299,680 $
1,294,398 $
1,167,969
Worldwide Revenues:
Colocation $
1,088,614 $
1,078,565 $
1,022,720 $
4,259,001 $
4,022,207
Interconnection 270,744 260,942 235,004 1,023,258 893,589
Managed infrastructure 97,546 82,258 71,775 337,345 292,628
Other 9,222 10,307 8,478 38,426 29,762
Recurring revenues 1,466,126 1,432,072 1,337,977 5,658,030 5,238,186
Non-recurring revenues 97,989 87,695 79,158 340,515 323,954
Revenues $
1,564,115 $
1,519,767 $
1,417,135 $
5,998,545 $
5,562,140
(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 $
830,735 $
767,979 $
725,636 $
3,074,340 $
2,810,184
Depreciation, amortization and accretion
expense (283,029) (265,936) (241,753) (1,050,106) (933,371)
Stock-based compensation expense (8,039) (7,856) (6,739) (32,893) (25,355)
Cash cost of revenues $
539,667 $
494,187 $
477,144 $
1,991,341 $
1,851,458
The geographic split of our cash cost of revenues is presented below:
Americas cash cost of revenues $
217,170 $
196,731 $
184,029 $
793,601 $
729,100
EMEA cash cost of revenues 199,827 189,423 187,972 754,056 720,890
Asia-Pacific cash cost of revenues 122,670 108,033 105,143 443,684 401,468
Cash cost of revenues $
539,667 $
494,187 $
477,144 $
1,991,341 $
1,851,458
(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 $
480,199 $
452,077 $
406,060 $
1,809,337 $
1,586,064
Depreciation and amortization expense (95,830) (96,350) (86,542) (376,904) (351,925)
Stock-based compensation expense (71,323) (67,392) (55,387) (278,127) (211,184)
Cash operating expense $
313,046 $
288,335 $
264,131 $
1,154,306 $
1,022,955
(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 $
187,055 $
172,727 $
160,556 $
718,356 $
651,046
Depreciation and amortization expense (48,745) (48,780) (47,659) (192,661) (192,450)
Stock-based compensation expense (18,505) (17,630) (12,467) (72,895) (56,719)
Cash sales and marketing expense $
119,805 $
106,317 $
100,430 $
452,800 $
401,877
(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 $
293,144 $
279,350 $
245,504 $
1,090,981 $
935,018
Depreciation and amortization expense (47,085) (47,570) (38,883) (184,243) (159,475)
Stock-based compensation expense (52,818) (49,762) (42,920) (205,232) (154,465)
Cash general and administrative expense $
193,241 $
182,018 $
163,701 $
701,506 $
621,078
(7)
The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below:
Americas cash SG&A $
195,180 $
185,051 $
155,561 $
728,135 $
621,005
EMEA cash SG&A 74,205 65,444 69,072 268,087 257,574
Asia-Pacific cash SG&A 43,661 37,840 39,498 158,084 144,376
Cash SG&A $
313,046 $
288,335 $
264,131 $
1,154,306 $
1,022,955
(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 $
228,606 $
288,350 $
312,974 $
1,052,928 $
1,169,631
Depreciation, amortization and accretion
expense 378,859 362,286 328,295 1,427,010 1,285,296
Stock-based compensation expense 79,362 75,248 62,126 311,020 236,539
Impairment charges 7,306 (233) 7,306 15,790
Transaction costs 24,948 5,840 16,545 55,935 24,781
Gain on asset sales (373) (1,785) (43,847) (1,301) (44,310)
Adjusted EBITDA $
711,402 $
737,245 $
675,860 $
2,852,898 $
2,687,727
The geographic split of our adjusted EBITDA is presented below:
Americas income from operations $
22,066 $
50,657 $
136,236 $
178,454 $
413,936
Americas depreciation, amortization and
accretion expense 195,437 182,899 165,580 731,979 668,727
Americas stock-based compensation expense 59,956 55,044 44,878 234,015 170,102
Americas impairment charges (233) - 15,790
Americas transaction costs 23,634 3,735 13,378 43,922 14,830
Americas gain on asset sales (1,341) (1,785) (45,763) (2,348) (45,763)
Americas adjusted EBITDA $
299,752 $
290,550 $
314,076 $
1,186,022 $
1,237,622
EMEA income from operations $
118,380 $
148,992 $
96,453 $
531,530 $
421,786
EMEA depreciation, amortization and
accretion expense 103,067 101,265 95,264 390,025 354,930
EMEA stock-based compensation expense 12,139 12,770 10,788 48,151 40,796
EMEA transaction costs 718 189 2,324 1,490 9,015
EMEA loss on asset sales 2,971 1,916 3,050 1,453
EMEA adjusted EBITDA $
237,275 $
263,216 $
206,745 $
974,246 $
827,980
Asia-Pacific income from operations $
88,160 $
88,701 $
80,285 $
342,944 $
333,909
Asia-Pacific depreciation, amortization and
accretion expense 80,355 78,122 67,451 305,006 261,639
Asia-Pacific stock-based compensation
expense 7,267 7,434 6,460 28,854 25,641
Asia-Pacific impairment charges 7,306 7,306 -
Asia-Pacific transaction costs 596 1,916 843 10,523 936
Asia-Pacific gain on asset sales (2,003) (2,003) -
Asia-Pacific adjusted EBITDA $
174,375 $
183,479 $
155,039 $
692,630 $
622,125
(9) We define cash gross margins as cash gross profit divided by revenues.
Our cash gross margins by geographic region is presented below:
Americas cash gross margins 70 71 72 71 72
% % % % %
EMEA cash gross margins 61 63 59 62 60
% % % % %
Asia-Pacific cash gross margins 64 67 65 66 66
% % % % %
(10)
We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA margins 42 43 48 44 48
% % % % %
EMEA adjusted EBITDA margins 46 51 45 49 46
% % % % %
Asia-Pacific adjusted EBITDA margins 51 56 52 54 53
% % % % %
(11) We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth
as follows:
Adjusted EBITDA - current period $
711,402 $
737,245 $
675,860 $
2,852,898 $
2,687,727
Less adjusted EBITDA -prior period (737,245) (720,041) (674,702) (2,687,727) (2,413,240)
Adjusted EBITDA growth $
(25,843) $
17,204 $
1,158 $
165,171 $
274,487
Revenues - current period $
1,564,115 $
1,519,767 $
1,417,135 $
5,998,545 $
5,562,140
Less revenues - prior period (1,519,767) (1,470,121) (1,396,810) (5,562,140) (5,071,654)
Revenue growth $
44,348 $
49,646 $
20,325 $
436,405 $
490,486
Adjusted EBITDA flow-through rate (58) 35 6 38 56
% % % % %
(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 $
50,936 $
66,831 $
124,835 $
370,074 $
507,245
Net loss attributable to non-controlling
interests 58 (144) 160 (297) 205
Net income attributable to Equinix 50,994 66,687 124,995 369,777 507,450
Adjustments:
Real estate depreciation 247,554 232,110 221,143 924,064 845,798
(Gain) loss on disposition of real estate
property 2,494 (1,313) (42,758) 4,063 (39,337)
Adjustments for FFO from unconsolidated
joint ventures 705 699 645 2,726 645
FFO attributable to common shareholders $
301,747 $
298,183 $
304,025 $
1,300,630 $
1,314,556
(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 $
301,747 $
298,183 $
304,025 $
1,300,630 $
1,314,556
Adjustments:
Installation revenue adjustment 3,504 (3,797) 2,751 (125) 11,031
Straight-line rent expense adjustment 3,567 3,019 773 10,787 8,167
Amortization of deferred financing costs and
debt discounts and premiums 3,951 3,884 3,613 15,739 13,042
Contract cost adjustment (12,823) (7,111) (11,556) (35,675) (40,861)
Stock-based compensation expense 79,362 75,248 62,126 311,020 236,539
Non-real estate depreciation expense 79,693 78,356 60,712 300,258 242,761
Amortization expense 50,972 50,222 48,689 199,047 196,278
Accretion expense (adjustment) 640 1,598 (2,249) 3,641 459
Recurring capital expenditures (74,446) (38,327) (80,925) (160,637) (186,002)
Loss on debt extinguishment 44,001 93,494 52,758 145,804 52,825
Transaction costs 24,948 5,840 16,545 55,935 24,781
Impairment charges 7,306 (233) 7,306 15,790
Income tax expense adjustment 10,837 11,480 13,502 33,220 39,676
Adjustments for AFFO from unconsolidated
joint ventures 1,012 287 2,080 2,195 2,080
AFFO attributable to common shareholders $
516,965 $
579,682 $
472,611 $
2,189,145 $
1,931,122
(14)
Following is how we reconcile from adjusted EBITDA to AFFO:
Adjusted EBITDA $
711,402 $
737,245 $
675,860 $
2,852,898 $
2,687,727
Adjustments:
Interest expense, net of interest income (89,668) (98,284) (110,085) (397,812) (451,987)
Amortization of deferred financing costs and
debt discounts and premiums 3,951 3,884 3,613 15,739 13,042
Income tax expense (41,304) (29,903) (37,632) (146,151) (185,352)
Income tax expense adjustment 10,837 11,480 13,502 33,220 39,676
Straight-line rent expense adjustment 3,567 3,019 773 10,787 8,167
Contract cost adjustment (12,823) (7,111) (11,556) (35,675) (40,861)
Installation revenue adjustment 3,504 (3,797) 2,751 (125) 11,031
Recurring capital expenditures (74,446) (38,327) (80,925) (160,637) (186,002)
Other income (2,697) 162 12,336 6,913 27,778
(Gain) loss on disposition of real estate
property 2,494 (1,313) (42,758) 4,063 (39,337)
Adjustments for unconsolidated JVs' and non-
controlling interests 1,775 842 2,885 4,624 2,930
Adjustment for gain on sale of asset 373 1,785 43,847 1,301 44,310
AFFO attributable to common shareholders $
516,965 $
579,682 $
472,611 $
2,189,145 $
1,931,122
(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 89,113 88,806 85,289 87,700 84,140
Effect of dilutive securities:
Employee equity awards 613 713 542 710 539
Shares used in computing diluted net income
per share, FFO per share and AFFO per share 89,726 89,519 85,831 88,410 84,679
Basic FFO per share $
3.39 $
3.36 $
3.56 $
14.83 $
15.62
Diluted FFO per share $
3.36 $
3.33 $
3.54 $
14.71 $
15.52
Basic AFFO per share $
5.80 $
6.53 $
5.54 $
24.96 $
22.95
Diluted AFFO per share $
5.76 $
6.48 $
5.51 $
24.76 $
22.81
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SOURCE Equinix, Inc.
