Equinix Reports Third Quarter 2020 Results
Equinix reported Q3 2020 revenues of $1.520 billion, a 9% increase year-over-year, marking its 71st consecutive quarter of revenue growth. Operating income rose to $288 million, while net income fell 50% to $67 million, largely due to a $93 million loss on debt extinguishment. The company initiated a $1.85 billion debt capital raise, including $1.35 billion in green bonds. Annual guidance for revenue is set between $5.983 and $6.003 billion, with expectations for significant adjusted EBITDA growth.
- 71st consecutive quarter of revenue growth.
- Q3 revenues increased by 9% year-over-year.
- Operating income rose to $288 million, a 2% increase from Q2.
- Initiated $1.85 billion debt raise to invest in sustainability.
- Annual revenue guidance revised upward by $39 million.
- Net income decreased by 50% from the previous quarter, totaling $67 million.
- Net income per share dropped 51% to $0.74.
REDWOOD CITY, Calif., Oct. 28, 2020 /PRNewswire/ --
- Quarterly revenues increased
9% on both an as-reported and a normalized and constant currency basis over the same quarter last year to$1.52 0 billion, representing the company's 71st consecutive quarter of revenue growth - Initiated
$1.85 billion debt capital raise including the company's inaugural green bonds totaling$1.35 billion to further invest in its sustainability initiatives - Expanded Platform Equinix® with the launch of Equinix Metal™, a fully automated and interconnected bare metal service
Equinix, Inc. (Nasdaq: EQIX), the world's digital infrastructure company, today reported results for the quarter ended September 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.
Third Quarter 2020 Results Summary
- Revenues
$1.52 0 billion, a3% increase over the previous quarter- Includes a
$13 million foreign currency benefit when compared to prior guidance rates - Operating Income
$288 million , a2% increase over the previous quarter and an operating margin of19% - Adjusted EBITDA
$737 million , a49% adjusted EBITDA margin- Includes a
$6 million foreign currency benefit when compared to prior guidance rates - Includes
$6 million of integration costs - Net Income and Net Income per Share attributable to Equinix
$67 million , a50% decrease from the previous quarter, largely due to the$93 million loss on debt extinguishment charge, related to the company's$2.6 billion debt refinancing completed in July$0.74 per share, a51% decrease from the previous quarter- AFFO and AFFO per Share
$580 million , a4% increase over the previous quarter, due to strong operating performance and a decrease in net interest expense$6.48 per share, a2% increase over the previous quarter- Includes
$6 million of integration costs
2020 Annual Guidance Summary
- Revenues
$5.98 3 -$6.00 3 billion, an ~8% increase over the previous year on both an as-reported and a normalized and constant currency basis- An increase of
$39 million compared to prior guidance, including a$25 million foreign currency benefit when compared to the prior guidance FX rates - Adjusted EBITDA
$2.82 7 -$2.84 7 billion, a47% adjusted EBITDA margin- An increase of
$21 million compared to prior guidance, including an$11 million foreign currency benefit when compared to the prior guidance FX rates - Assumes
$20 million of integration costs - AFFO and AFFO per Share
$2.15 7 -$2.17 7 billion, an increase of 12 -13% over the previous year, or a normalized and constant currency increase of 16 -17% - An increase of
$25 million compared to prior guidance, including an$8 million foreign currency benefit $24.38 -$24.61 per share, an increase of 7 -8% over the previous year, or a normalized and constant currency increase of 10 -11% - 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:
"As businesses navigate the economic, health and societal changes happening in the world, Equinix is in a unique position to help our customers adapt, respond and accelerate their digital transformation – a key driver for economic recovery. Companies in every sector are embracing digital transformation as a critical business priority, and we are well-positioned to help our customers scale with agility and create digital advantage. We continue to invest in our strategy, evolving our platform in response to evolving customer needs, expanding our global reach to accelerate digital delivery, committing to a more sustainable future and ensuring that our culture is widely recognized as a place that attracts, embraces, inspires and develops exceptional and diverse talent."
Business Highlights
- Today, Equinix has the most comprehensive global interconnection platform, comprising over 386,000 physical and virtual interconnections. In Q3, Equinix added 8,500 net interconnections, more than its next 15 competitors combined, driven by video conferencing, streaming, enterprise cloud connectivity and work-from-home local aggregation. Equinix Internet Exchange™ experienced peak traffic, up
43% year-over-year, with a7% increase quarter-over-quarter. Equinix Cloud Exchange Fabric®, which has been renamed Equinix Fabric™, also had a strong quarter, crossing the$100 million annual run rate, with broad-based adoption across all verticals driven by virtual connections and increasing bandwidth consumption. - Equinix continued to complement and extend its global platform both organically and through acquisitions, enhancing cloud and network density to offer enterprises options for digital transformation:
- On August 10, Equinix announced its entry into India, one of the world's largest economies and fastest-growing data center markets and the 27th country served by Platform Equinix®. Upon close, the GPX India acquisition will add two highly interconnected data centers in Mumbai to support the company's pan-Indian expansion.
- On October 1, Equinix closed the acquisition of 12 Bell Canada data centers, positioning the company as a leading digital infrastructure provider in Canada, while strengthening relationships with Canadian enterprises. Equinix expects to acquire Bell Canada's Ottawa data center (OT1) in the fourth quarter of 2020.
- On October 6, Equinix launched Equinix Metal™, a fully automated and interconnected bare metal service. Equinix Metal provides digital businesses with an automated, "as-a-service" deployment method to build their foundational infrastructure and take advantage of the global reach, interconnected ecosystems and trusted partners available on Platform Equinix®. Featuring native integration with Equinix Fabric™, Equinix Metal provides companies the option to deploy the physical infrastructure of their choice, at software speed across our platform, enabling digital leaders to place infrastructure where they need it, when they need it.
- In Q3, Equinix initiated its first green bond financing as a mechanism to further invest in innovative designs and technologies, while increasing the company's efficiency in sustainable operations. The debt financing closed in October 2020. Equinix also received the 2020 Green Power Partner Award from the U.S. EPA, recognizing the company's contribution to helping advance the development of the nation's green power market, and its commitment to reach
100% clean and renewable energy across its portfolio. - Equinix continues the growth of its indirect selling initiatives, as the company pursues high-value strategic channel partnerships. In Q3, Equinix delivered strong channel bookings, accounting for more than
30% of its total bookings and generating60% of all new logos. New channel wins this quarter spanned across a wide range of industry segments with reseller and alliance partners, including Cisco, Microsoft, Oracle, WWT and Zenlayer.
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. 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 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 September 30, 2020.
Business Outlook
For the fourth quarter of 2020, the Company expects revenues to range between
For the full year of 2020, total revenues are expected to range between
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
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.
Q3 2020 Results Conference Call and Replay Information
Equinix will discuss its quarterly results for the period ended September 30, 2020, along with its future outlook, in its quarterly conference call on Wednesday, October 28, 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, February 10, 2021, by dialing 1-203-369-0270 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
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 | Nine Months Ended | ||||||||||||||||||
September | June 30, | September | September 30, 2020 | September | |||||||||||||||
Recurring revenues | $ | 1,432,072 | $ | 1,398,138 | $ | 1,319,336 | $ | 4,191,904 | $ | 3,900,209 | |||||||||
Non-recurring revenues | 87,695 | 71,983 | 77,474 | 242,526 | 244,796 | ||||||||||||||
Revenues | 1,519,767 | 1,470,121 | 1,396,810 | 4,434,430 | 4,145,005 | ||||||||||||||
Cost of revenues | 767,979 | 739,344 | 704,339 | 2,243,605 | 2,084,548 | ||||||||||||||
Gross profit | 751,788 | 730,777 | 692,471 | 2,190,825 | 2,060,457 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Sales and marketing | 172,727 | 178,124 | 161,574 | 531,301 | 490,490 | ||||||||||||||
General and administrative | 279,350 | 256,890 | 241,812 | 797,837 | 689,514 | ||||||||||||||
Transaction costs | 5,840 | 13,617 | 2,991 | 30,987 | 8,236 | ||||||||||||||
Impairment charges | 7,306 | — | 1,189 | 7,306 | 16,023 | ||||||||||||||
Gain on asset sales | (1,785) | (342) | (463) | (928) | (463) | ||||||||||||||
Total operating expenses | 463,438 | 448,289 | 407,103 | 1,366,503 | 1,203,800 | ||||||||||||||
Income from operations | 288,350 | 282,488 | 285,368 | 824,322 | 856,657 | ||||||||||||||
Interest and other income (expense): | |||||||||||||||||||
Interest income | 1,452 | 1,685 | 8,201 | 7,410 | 20,165 | ||||||||||||||
Interest expense | (99,736) | (108,480) | (118,674) | (315,554) | (362,067) | ||||||||||||||
Other income | 162 | 4,278 | 3,428 | 9,610 | 15,442 | ||||||||||||||
Gain (loss) on debt extinguishment | (93,494) | (1,868) | 315 | (101,803) | (67) | ||||||||||||||
Total interest and other, net | (191,616) | (104,385) | (106,730) | (400,337) | (326,527) | ||||||||||||||
Income before income taxes | 96,734 | 178,103 | 178,638 | 423,985 | 530,130 | ||||||||||||||
Income tax expense | (29,903) | (44,753) | (57,827) | (104,847) | (147,720) | ||||||||||||||
Net income | 66,831 | 133,350 | 120,811 | 319,138 | 382,410 | ||||||||||||||
Net (income) loss attributable to non-controlling interests | (144) | (46) | 39 | (355) | 45 | ||||||||||||||
Net income attributable to Equinix | $ | 66,687 | $ | 133,304 | $ | 120,850 | $ | 318,783 | $ | 382,455 | |||||||||
Net income per share attributable to Equinix: | |||||||||||||||||||
Basic net income per share | $ | 0.75 | $ | 1.53 | $ | 1.42 | $ | 3.65 | $ | 4.57 | |||||||||
Diluted net income per share | $ | 0.74 | $ | 1.52 | $ | 1.41 | $ | 3.63 | $ | 4.54 | |||||||||
Shares used in computing basic net income per share | 88,806 | 87,303 | 85,012 | 87,226 | 83,753 | ||||||||||||||
Shares used in computing diluted net income per share | 89,519 | 87,901 | 85,571 | 87,925 | 84,223 | ||||||||||||||
EQUINIX, INC. | |||||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September | June 30, | September | September | September | |||||||||||||||
Net income | $ | 66,831 | $ | 133,350 | $ | 120,811 | $ | 319,138 | $ | 382,410 | |||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||
Foreign currency translation adjustment ("CTA") gain (loss) | 299,441 | 181,286 | (284,927) | 66,935 | (341,519) | ||||||||||||||
Net investment hedge CTA gain (loss) | (227,101) | (97,058) | 188,897 | (179,213) | 227,890 | ||||||||||||||
Unrealized gain (loss) on cash flow hedges | (33,842) | (17,868) | 14,217 | (54,966) | 19,086 | ||||||||||||||
Net actuarial gain (loss) on defined benefit plans | 22 | 20 | (8) | 77 | (26) | ||||||||||||||
Total other comprehensive income (loss), net of tax | 38,520 | 66,380 | (81,821) | (167,167) | (94,569) | ||||||||||||||
Comprehensive income, net of tax | 105,351 | 199,730 | 38,990 | 151,971 | 287,841 | ||||||||||||||
Net (income) loss attributable to non-controlling interests | (144) | (46) | 39 | (355) | 45 | ||||||||||||||
Other comprehensive (income) loss attributable to non-controlling interests | (30) | (2) | 28 | (21) | 35 | ||||||||||||||
Comprehensive income attributable to Equinix | $ | 105,177 | $ | 199,682 | $ | 39,057 | $ | 151,595 | $ | 287,921 | |||||||||
EQUINIX, INC. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
September 30, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 2,645,045 | $ | 1,869,577 | |||
Short-term investments | 14,186 | 10,362 | |||||
Accounts receivable, net | 705,509 | 689,134 | |||||
Other current assets | 384,364 | 302,880 | |||||
Assets held for sale | 294,924 | 663 | |||||
Total current assets | 4,044,028 | 2,872,616 | |||||
Property, plant and equipment, net | 13,110,554 | 12,152,597 | |||||
Operating lease right-of-use assets | 1,436,337 | 1,475,367 | |||||
Goodwill | 5,125,230 | 4,781,858 | |||||
Intangible assets, net | 2,047,122 | 2,102,389 | |||||
Other assets | 673,443 | 580,788 | |||||
Total assets | $ | 26,436,714 | $ | 23,965,615 | |||
Liabilities and Stockholders' Equity | |||||||
Accounts payable and accrued expenses | $ | 822,062 | $ | 760,718 | |||
Accrued property, plant and equipment | 363,869 | 301,535 | |||||
Current portion of operating lease liabilities | 143,429 | 145,606 | |||||
Current portion of finance lease liabilities | 113,371 | 75,239 | |||||
Current portion of mortgage and loans payable | 78,273 | 77,603 | |||||
Current portion of senior notes | 2,043,994 | 643,224 | |||||
Other current liabilities | 231,185 | 153,938 | |||||
Total current liabilities | 3,796,183 | 2,157,863 | |||||
Operating lease liabilities, less current portion | 1,279,930 | 1,315,656 | |||||
Finance lease liabilities, less current portion | 1,680,510 | 1,430,882 | |||||
Mortgage and loans payable, less current portion | 1,241,777 | 1,289,434 | |||||
Senior notes, less current portion | 7,160,735 | 8,309,673 | |||||
Other liabilities | 721,613 | 621,725 | |||||
Total liabilities | 15,880,748 | 15,125,233 | |||||
Common stock | 89 | 86 | |||||
Additional paid-in capital | 14,950,522 | 12,696,433 | |||||
Treasury stock | (122,686) | (144,256) | |||||
Accumulated dividends | (4,879,618) | (4,168,469) | |||||
Accumulated other comprehensive loss | (1,101,801) | (934,613) | |||||
Retained earnings | 1,709,308 | 1,391,425 | |||||
Total Equinix stockholders' equity | 10,555,814 | 8,840,606 | |||||
Non-controlling interests | 152 | (224) | |||||
Total stockholders' equity | 10,555,966 | 8,840,382 | |||||
Total liabilities and stockholders' equity | $ | 26,436,714 | $ | 23,965,615 | |||
Ending headcount by geographic region is as follows: | |||||||
Americas headcount | 4,324 | 3,672 | |||||
EMEA headcount | 3,338 | 2,941 | |||||
Asia-Pacific headcount | 1,976 | 1,765 | |||||
Total headcount | 9,638 | 8,378 | |||||
EQUINIX, INC. | |||||||
Summary of Debt Principal Outstanding | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
September 30, 2020 | December 31, 2019 | ||||||
Finance lease liabilities | $ | 1,793,881 | $ | 1,506,121 | |||
Term loans | 1,240,281 | 1,282,302 | |||||
Mortgage payable and other loans payable | 79,769 | 84,735 | |||||
Plus: debt discount and issuance costs, net | 1,814 | 3,081 | |||||
Total mortgage and loans payable principal | 1,321,864 | 1,370,118 | |||||
Senior notes | 9,204,729 | 8,952,897 | |||||
Plus: debt issuance costs | 90,441 | 78,030 | |||||
Less: debt premium | (370) | (1,716) | |||||
Total senior notes principal | 9,294,800 | 9,029,211 | |||||
Total debt principal outstanding | $ | 12,410,545 | $ | 11,905,450 | |||
EQUINIX, INC. | ||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September | June 30, | September | September | September | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 66,831 | $ | 133,350 | $ | 120,811 | $ | 319,138 | $ | 382,410 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation, amortization and accretion | 362,286 | 348,434 | 321,746 | 1,048,151 | 957,001 | |||||||||||||||
Stock-based compensation | 75,248 | 75,844 | 63,871 | 215,591 | 174,413 | |||||||||||||||
Amortization of debt issuance costs and debt discounts and premiums | 3,884 | 4,444 | 3,196 | 11,788 | 9,429 | |||||||||||||||
(Gain) loss on debt extinguishment | 93,494 | 1,868 | (315) | 101,803 | 67 | |||||||||||||||
Gain on asset sales | (1,785) | (342) | (463) | (928) | (463) | |||||||||||||||
Impairment charges | 7,306 | — | 1,189 | 7,306 | 16,023 | |||||||||||||||
Other items | (2,518) | 13,891 | 2,820 | 18,229 | 15,789 | |||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Accounts receivable | (23,871) | (29,539) | 3,331 | (38,104) | (123,389) | |||||||||||||||
Income taxes, net | (32,054) | 8,164 | 42,482 | (20,193) | 73,144 | |||||||||||||||
Accounts payable and accrued expenses | 61,410 | 117 | 10,647 | 35,846 | 6,660 | |||||||||||||||
Operating lease right-of-use assets | 38,319 | 37,495 | 29,743 | 114,611 | 108,226 | |||||||||||||||
Operating lease liabilities | (35,300) | (36,898) | (38,254) | (107,391) | (112,059) | |||||||||||||||
Other assets and liabilities | (81,088) | 17,858 | (61,810) | (82,169) | (44,193) | |||||||||||||||
Net cash provided by operating activities | 532,162 | 574,686 | 498,994 | 1,623,678 | 1,463,058 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases, sales and maturities of investments, net | 3,969 | (1,341) | (2,905) | (36,312) | (14,747) | |||||||||||||||
Business acquisitions, net of cash and restricted cash acquired | — | 39 | — | (478,248) | (34,143) | |||||||||||||||
Purchases of real estate | (41,895) | (46,194) | (16,852) | (124,462) | (64,288) | |||||||||||||||
Purchases of other property, plant and equipment | (565,285) | (481,948) | (556,822) | (1,448,174) | (1,364,960) | |||||||||||||||
Proceeds from asset sales | — | — | 117 | — | 117 | |||||||||||||||
Net cash used in investing activities | (603,211) | (529,444) | (576,462) | (2,087,196) | (1,478,021) | |||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from employee equity awards | 31,727 | — | 24,425 | 62,118 | 52,018 | |||||||||||||||
Payment of dividend distributions | (240,690) | (236,008) | (212,752) | (710,177) | (625,804) | |||||||||||||||
Proceeds from public offering of common stock, net of offering costs | 196,477 | 1,683,106 | 99,421 | 1,981,375 | 1,660,976 | |||||||||||||||
Proceeds from mortgage and loans payable | — | 500,790 | — | 750,790 | — | |||||||||||||||
Proceeds from senior notes, net of debt discounts | — | 2,585,736 | — | 2,585,736 | — | |||||||||||||||
Repayment of finance lease liabilities | (31,765) | (23,704) | (19,673) | (74,446) | (62,785) | |||||||||||||||
Repayment of mortgage and loans payable | (19,431) | (770,677) | (17,584) | (808,609) | (53,796) | |||||||||||||||
Repayment of senior notes | (1,947,050) | (150,000) | — | (2,440,761) | (150,000) | |||||||||||||||
Debt extinguishment costs | (77,785) | — | — | (82,404) | — | |||||||||||||||
Debt issuance costs | — | (26,266) | — | (26,266) | — | |||||||||||||||
Net cash provided by (used in) financing activities | (2,088,517) | 3,562,977 | (126,163) | 1,237,356 | 820,609 | |||||||||||||||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | 18,513 | 12,411 | (13,528) | 5,637 | (13,117) | |||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (2,141,053) | 3,620,630 | (217,159) | 779,475 | 792,529 | |||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 4,807,141 | 1,186,511 | 1,637,292 | 1,886,613 | 627,604 | |||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 2,666,088 | $ | 4,807,141 | $ | 1,420,133 | $ | 2,666,088 | $ | 1,420,133 | ||||||||||
Supplemental cash flow information: | ||||||||||||||||||||
Cash paid for taxes | $ | 55,473 | $ | 15,752 | $ | 29,383 | $ | 116,549 | $ | 89,076 | ||||||||||
Cash paid for interest | $ | 115,174 | $ | 122,669 | $ | 153,265 | $ | 363,767 | $ | 412,675 | ||||||||||
Free cash flow (negative free cash flow)(1) | $ | (75,018) | $ | 46,583 | $ | (74,563) | $ | (427,206) | $ | (216) | ||||||||||
Adjusted free cash flow (2) | $ | (33,123) | $ | 92,738 | $ | (57,711) | $ | 175,504 | $ | 98,215 | ||||||||||
(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 | $ | 532,162 | $ | 574,686 | $ | 498,994 | $ | 1,623,678 | $ | 1,463,058 | ||||||||||
Net cash used in investing activities as presented above | (603,211) | (529,444) | (576,462) | (2,087,196) | (1,478,021) | |||||||||||||||
Purchases, sales and maturities of investments, net | (3,969) | 1,341 | 2,905 | 36,312 | 14,747 | |||||||||||||||
Free cash flow (negative free cash flow) | $ | (75,018) | $ | 46,583 | $ | (74,563) | $ | (427,206) | $ | (216) | ||||||||||
(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 | $ | (75,018) | $ | 46,583 | $ | (74,563) | $ | (427,206) | $ | (216) | ||||||||||
Less business acquisitions, net of cash and restricted cash acquired | — | (39) | — | 478,248 | 34,143 | |||||||||||||||
Less purchases of real estate | 41,895 | 46,194 | 16,852 | 124,462 | 64,288 | |||||||||||||||
Adjusted free cash flow | $ | (33,123) | $ | 92,738 | $ | (57,711) | $ | 175,504 | $ | 98,215 | ||||||||||
EQUINIX, INC. | ||||||||||||||||||||
Non-GAAP Measures and Other Supplemental Data | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September | June 30, | September | September | September | ||||||||||||||||
Recurring revenues | $ | 1,432,072 | $ | 1,398,138 | $ | 1,319,336 | $ | 4,191,904 | $ | 3,900,209 | ||||||||||
Non-recurring revenues | 87,695 | 71,983 | 77,474 | 242,526 | 244,796 | |||||||||||||||
Revenues (1) | 1,519,767 | 1,470,121 | 1,396,810 | 4,434,430 | 4,145,005 | |||||||||||||||
Cash cost of revenues (2) | 494,187 | 480,946 | 464,950 | 1,451,674 | 1,374,314 | |||||||||||||||
Cash gross profit (3) | 1,025,580 | 989,175 | 931,860 | 2,982,756 | 2,770,691 | |||||||||||||||
Cash operating expenses (4)(7): | ||||||||||||||||||||
Cash sales and marketing expenses (5) | 106,317 | 111,007 | 98,117 | 332,995 | 301,447 | |||||||||||||||
Cash general and administrative expenses (6) | 182,018 | 158,127 | 159,041 | 508,265 | 457,377 | |||||||||||||||
Total cash operating expenses (4)(7) | 288,335 | 269,134 | 257,158 | 841,260 | 758,824 | |||||||||||||||
Adjusted EBITDA (8) | $ | 737,245 | $ | 720,041 | $ | 674,702 | $ | 2,141,496 | $ | 2,011,867 | ||||||||||
Cash gross margins (9) | 67 | % | 67 | % | 67 | % | 67 | % | 67 | % | ||||||||||
Adjusted EBITDA margins(10) | 49 | % | 49 | % | 48 | % | 48 | % | 49 | % | ||||||||||
Adjusted EBITDA flow-through rate (11) | 35 | % | 140 | % | (20) | % | 48 | % | 62 | % | ||||||||||
FFO (12) | $ | 298,183 | $ | 356,946 | $ | 331,485 | $ | 998,883 | $ | 1,010,531 | ||||||||||
AFFO (13)(14) | $ | 579,682 | $ | 557,793 | $ | 472,744 | $ | 1,672,180 | $ | 1,458,511 | ||||||||||
Basic FFO per share (15) | $ | 3.36 | $ | 4.09 | $ | 3.90 | $ | 11.45 | $ | 12.07 | ||||||||||
Diluted FFO per share (15) | $ | 3.33 | $ | 4.06 | $ | 3.87 | $ | 11.36 | $ | 12.00 | ||||||||||
Basic AFFO per share (15) | $ | 6.53 | $ | 6.39 | $ | 5.56 | $ | 19.17 | $ | 17.41 | ||||||||||
Diluted AFFO per share (15) | $ | 6.48 | $ | 6.35 | $ | 5.52 | $ | 19.02 | $ | 17.32 | ||||||||||
(1) | The geographic split of our revenues on a services basis is presented below: | |||||||||||||||||||
Americas Revenues: | ||||||||||||||||||||
Colocation | $ | 450,030 | $ | 447,498 | $ | 441,596 | $ | 1,348,482 | $ | 1,325,663 | ||||||||||
Interconnection | 156,677 | 153,387 | 146,212 | 460,993 | 427,235 | |||||||||||||||
Managed infrastructure | 28,954 | 28,889 | 24,082 | 83,372 | 68,777 | |||||||||||||||
Other | 3,911 | 5,081 | 3,392 | 14,212 | 14,723 | |||||||||||||||
Recurring revenues | 639,572 | 634,855 | 615,282 | 1,907,059 | 1,836,398 | |||||||||||||||
Non-recurring revenues | 32,760 | 26,564 | 29,993 | 88,597 | 97,663 | |||||||||||||||
Revenues | $ | 672,332 | $ | 661,419 | $ | 645,275 | $ | 1,995,656 | $ | 1,934,061 | ||||||||||
EMEA Revenues: | ||||||||||||||||||||
Colocation | $ | 391,773 | $ | 381,144 | $ | 357,201 | $ | 1,135,247 | $ | 1,036,121 | ||||||||||
Interconnection | 55,700 | 50,904 | 41,063 | 155,145 | 117,202 | |||||||||||||||
Managed infrastructure | 30,690 | 29,012 | 27,651 | 89,839 | 85,136 | |||||||||||||||
Other | 5,581 | 6,130 | 1,787 | 14,177 | 6,561 | |||||||||||||||
Recurring revenues | 483,744 | 467,190 | 427,702 | 1,394,408 | 1,245,020 | |||||||||||||||
Non-recurring revenues | 34,339 | 20,900 | 30,438 | 90,674 | 97,635 | |||||||||||||||
Revenues | $ | 518,083 | $ | 488,090 | $ | 458,140 | $ | 1,485,082 | $ | 1,342,655 | ||||||||||
Asia-Pacific Revenues: | ||||||||||||||||||||
Colocation | $ | 236,762 | $ | 228,803 | $ | 214,304 | $ | 686,658 | $ | 637,703 | ||||||||||
Interconnection | 48,565 | 45,140 | 39,495 | 136,376 | 114,148 | |||||||||||||||
Managed infrastructure | 22,614 | 22,150 | 22,553 | 66,588 | 66,940 | |||||||||||||||
Other | 815 | — | — | 815 | — | |||||||||||||||
Recurring revenues | 308,756 | 296,093 | 276,352 | 890,437 | 818,791 | |||||||||||||||
Non-recurring revenues | 20,596 | 24,519 | 17,043 | 63,255 | 49,498 | |||||||||||||||
Revenues | $ | 329,352 | $ | 320,612 | $ | 293,395 | $ | 953,692 | $ | 868,289 | ||||||||||
Worldwide Revenues: | ||||||||||||||||||||
Colocation | $ | 1,078,565 | $ | 1,057,445 | $ | 1,013,101 | $ | 3,170,387 | $ | 2,999,487 | ||||||||||
Interconnection | 260,942 | 249,431 | 226,770 | 752,514 | 658,585 | |||||||||||||||
Managed infrastructure | 82,258 | 80,051 | 74,286 | 239,799 | 220,853 | |||||||||||||||
Other | 10,307 | 11,211 | 5,179 | 29,204 | 21,284 | |||||||||||||||
Recurring revenues | 1,432,072 | 1,398,138 | 1,319,336 | 4,191,904 | 3,900,209 | |||||||||||||||
Non-recurring revenues | 87,695 | 71,983 | 77,474 | 242,526 | 244,796 | |||||||||||||||
Revenues | $ | 1,519,767 | $ | 1,470,121 | $ | 1,396,810 | $ | 4,434,430 | $ | 4,145,005 | ||||||||||
(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 | $ | 767,979 | $ | 739,344 | $ | 704,339 | $ | 2,243,605 | $ | 2,084,548 | ||||||||||
Depreciation, amortization and accretion expense | (265,936) | (250,743) | (232,285) | (767,077) | (691,618) | |||||||||||||||
Stock-based compensation expense | (7,856) | (7,655) | (7,104) | (24,854) | (18,616) | |||||||||||||||
Cash cost of revenues | $ | 494,187 | $ | 480,946 | $ | 464,950 | $ | 1,451,674 | $ | 1,374,314 | ||||||||||
The geographic split of our cash cost of revenues is presented below: | ||||||||||||||||||||
Americas cash cost of revenues | $ | 196,731 | $ | 194,467 | $ | 182,516 | $ | 576,431 | $ | 545,071 | ||||||||||
EMEA cash cost of revenues | 189,423 | 177,558 | 180,370 | 554,229 | 532,918 | |||||||||||||||
Asia-Pacific cash cost of revenues | 108,033 | 108,921 | 102,064 | 321,014 | 296,325 | |||||||||||||||
Cash cost of revenues | $ | 494,187 | $ | 480,946 | $ | 464,950 | $ | 1,451,674 | $ | 1,374,314 | ||||||||||
(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 | $ | 452,077 | $ | 435,014 | $ | 403,386 | $ | 1,329,138 | $ | 1,180,004 | ||||||||||
Depreciation and amortization expense | (96,350) | (97,691) | (89,461) | (281,074) | (265,383) | |||||||||||||||
Stock-based compensation expense | (67,392) | (68,189) | (56,767) | (206,804) | (155,797) | |||||||||||||||
Cash operating expense | $ | 288,335 | $ | 269,134 | $ | 257,158 | $ | 841,260 | $ | 758,824 | ||||||||||
(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 | $ | 172,727 | $ | 178,124 | $ | 161,574 | $ | 531,301 | $ | 490,490 | ||||||||||
Depreciation and amortization expense | (48,780) | (48,902) | (47,663) | (143,916) | (144,791) | |||||||||||||||
Stock-based compensation expense | (17,630) | (18,215) | (15,794) | (54,390) | (44,252) | |||||||||||||||
Cash sales and marketing expense | $ | 106,317 | $ | 111,007 | $ | 98,117 | $ | 332,995 | $ | 301,447 | ||||||||||
(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 | $ | 279,350 | $ | 256,890 | $ | 241,812 | $ | 797,837 | $ | 689,514 | ||||||||||
Depreciation and amortization expense | (47,570) | (48,789) | (41,798) | (137,158) | (120,592) | |||||||||||||||
Stock-based compensation expense | (49,762) | (49,974) | (40,973) | (152,414) | (111,545) | |||||||||||||||
Cash general and administrative expense | $ | 182,018 | $ | 158,127 | $ | 159,041 | $ | 508,265 | $ | 457,377 | ||||||||||
(7) | The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below: | |||||||||||||||||||
Americas cash SG&A | $ | 185,051 | $ | 164,845 | $ | 156,103 | $ | 532,955 | $ | 465,444 | ||||||||||
EMEA cash SG&A | 65,444 | 66,935 | 65,252 | 193,882 | 188,502 | |||||||||||||||
Asia-Pacific cash SG&A | 37,840 | 37,354 | 35,803 | 114,423 | 104,878 | |||||||||||||||
Cash SG&A | $ | 288,335 | $ | 269,134 | $ | 257,158 | $ | 841,260 | $ | 758,824 | ||||||||||
(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 | $ | 288,350 | $ | 282,488 | $ | 285,368 | $ | 824,322 | $ | 856,657 | ||||||||||
Depreciation, amortization and accretion expense | 362,286 | 348,434 | 321,746 | 1,048,151 | 957,001 | |||||||||||||||
Stock-based compensation expense | 75,248 | 75,844 | 63,871 | 231,658 | 174,413 | |||||||||||||||
Impairment charges | 7,306 | — | 1,189 | 7,306 | 16,023 | |||||||||||||||
Transaction costs | 5,840 | 13,617 | 2,991 | 30,987 | 8,236 | |||||||||||||||
Gain on asset sales | (1,785) | (342) | (463) | (928) | (463) | |||||||||||||||
Adjusted EBITDA | $ | 737,245 | $ | 720,041 | $ | 674,702 | $ | 2,141,496 | $ | 2,011,867 | ||||||||||
The geographic split of our adjusted EBITDA is presented below: | ||||||||||||||||||||
Americas income from operations | $ | 50,657 | $ | 58,423 | $ | 88,494 | $ | 156,388 | $ | 277,700 | ||||||||||
Americas depreciation, amortization and accretion expense | 182,899 | 182,204 | 168,397 | 536,542 | 503,147 | |||||||||||||||
Americas stock-based compensation expense | 55,044 | 56,326 | 48,377 | 174,059 | 125,224 | |||||||||||||||
Americas impairment charges | — | — | 1,189 | — | 16,023 | |||||||||||||||
Americas transaction costs | 3,735 | 5,575 | 199 | 20,288 | 1,452 | |||||||||||||||
Americas gain on asset sales | (1,785) | (421) | — | (1,007) | — | |||||||||||||||
Americas adjusted EBITDA | $ | 290,550 | $ | 302,107 | $ | 306,656 | $ | 886,270 | $ | 923,546 | ||||||||||
EMEA income from operations | $ | 148,992 | $ | 138,154 | $ | 113,771 | $ | 413,150 | $ | 325,333 | ||||||||||
EMEA depreciation, amortization and accretion expense | 101,265 | 92,953 | 87,010 | 286,958 | 259,666 | |||||||||||||||
EMEA stock-based compensation expense | 12,770 | 12,240 | 9,792 | 36,012 | 30,008 | |||||||||||||||
EMEA transaction costs | 189 | 171 | 2,408 | 772 | 6,691 | |||||||||||||||
EMEA (gain) loss on asset sales | — | 79 | (463) | 79 | (463) | |||||||||||||||
EMEA adjusted EBITDA | $ | 263,216 | $ | 243,597 | $ | 212,518 | $ | 736,971 | $ | 621,235 | ||||||||||
Asia-Pacific income from operations | $ | 88,701 | $ | 85,911 | $ | 83,103 | $ | 254,784 | $ | 253,624 | ||||||||||
Asia-Pacific depreciation, amortization and accretion expense | 78,122 | 73,277 | 66,339 | 224,651 | 194,188 | |||||||||||||||
Asia-Pacific stock-based compensation expense | 7,434 | 7,278 | 5,702 | 21,587 | 19,181 | |||||||||||||||
Asia-Pacific impairment charges | 7,306 | — | — | 7,306 | — | |||||||||||||||
Asia-Pacific transaction costs | 1,916 | 7,871 | 384 | 9,927 | 93 | |||||||||||||||
Asia-Pacific adjusted EBITDA | $ | 183,479 | $ | 174,337 | $ | 155,528 | $ | 518,255 | $ | 467,086 | ||||||||||
(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 | % | 71 | % | 72 | % | 71 | % | 72 | % | ||||||||||
EMEA cash gross margins | 63 | % | 64 | % | 61 | % | 63 | % | 60 | % | ||||||||||
Asia-Pacific cash gross margins | 67 | % | 66 | % | 65 | % | 66 | % | 66 | % | ||||||||||
(10) | We define adjusted EBITDA margins as adjusted EBITDA divided by revenues. | |||||||||||||||||||
Americas adjusted EBITDA margins | 43 | % | 46 | % | 48 | % | 44 | % | 48 | % | ||||||||||
EMEA adjusted EBITDA margins | 51 | % | 50 | % | 46 | % | 50 | % | 46 | % | ||||||||||
Asia-Pacific adjusted EBITDA margins | 56 | % | 54 | % | 53 | % | 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 | $ | 737,245 | $ | 720,041 | $ | 674,702 | $ | 2,141,496 | $ | 2,011,867 | ||||||||||
Less adjusted EBITDA - prior period | (720,041) | (684,210) | (677,010) | (2,027,572) | (1,833,725) | |||||||||||||||
Adjusted EBITDA growth | $ | 17,204 | $ | 35,831 | $ | (2,308) | $ | 113,924 | $ | 178,142 | ||||||||||
Revenues - current period | $ | 1,519,767 | $ | 1,470,121 | $ | 1,396,810 | $ | 4,434,430 | $ | 4,145,005 | ||||||||||
Less revenues - prior period | (1,470,121) | (1,444,542) | (1,384,977) | (4,198,922) | (3,855,777) | |||||||||||||||
Revenue growth | $ | 49,646 | $ | 25,579 | $ | 11,833 | $ | 235,508 | $ | 289,228 | ||||||||||
Adjusted EBITDA flow-through rate | 35 | % | 140 | % | (20) | % | 48 | % | 62 | % | ||||||||||
(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 | $ | 66,831 | $ | 133,350 | $ | 120,811 | $ | 319,138 | $ | 382,410 | ||||||||||
Net (income) loss attributable to non-controlling interests | (144) | (46) | 39 | (355) | 45 | |||||||||||||||
Net income attributable to Equinix | 66,687 | 133,304 | 120,850 | 318,783 | 382,455 | |||||||||||||||
Adjustments: | ||||||||||||||||||||
Real estate depreciation | 232,110 | 222,613 | 209,903 | 676,510 | 624,655 | |||||||||||||||
(Gain) loss on disposition of real estate property | (1,313) | 376 | 732 | 1,569 | 3,421 | |||||||||||||||
Adjustments for FFO from unconsolidated joint ventures | 699 | 653 | — | 2,021 | — | |||||||||||||||
FFO attributable to common shareholders | $ | 298,183 | $ | 356,946 | $ | 331,485 | $ | 998,883 | $ | 1,010,531 | ||||||||||
(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 | $ | 298,183 | $ | 356,946 | $ | 331,485 | $ | 998,883 | $ | 1,010,531 | ||||||||||
Adjustments: | ||||||||||||||||||||
Installation revenue adjustment | (3,797) | 3,649 | 5,759 | (3,629) | 8,280 | |||||||||||||||
Straight-line rent expense adjustment | 3,019 | 2,395 | 2,716 | 7,220 | 7,394 | |||||||||||||||
Amortization of deferred financing costs and debt discounts and premiums | 3,884 | 4,444 | 3,196 | 11,788 | 9,429 | |||||||||||||||
Contract cost adjustment | (7,111) | (5,307) | (10,179) | (22,852) | (29,305) | |||||||||||||||
Stock-based compensation expense | 75,248 | 75,844 | 63,871 | 231,658 | 174,413 | |||||||||||||||
Non-real estate depreciation expense | 78,356 | 76,618 | 63,151 | 220,565 | 182,049 | |||||||||||||||
Amortization expense | 50,222 | 49,362 | 48,837 | 148,075 | 147,589 | |||||||||||||||
Accretion expense (adjustment) | 1,598 | (159) | (145) | 3,001 | 2,708 | |||||||||||||||
Recurring capital expenditures | (38,327) | (29,996) | (47,404) | (86,191) | (105,077) | |||||||||||||||
(Gain) loss on debt extinguishment | 93,494 | 1,868 | (315) | 101,803 | 67 | |||||||||||||||
Transaction costs | 5,840 | 13,617 | 2,991 | 30,987 | 8,236 | |||||||||||||||
Impairment charges | 7,306 | — | 1,189 | 7,306 | 16,023 | |||||||||||||||
Income tax expense adjustment | 11,480 | 8,070 | 7,592 | 22,383 | 26,174 | |||||||||||||||
Adjustments for AFFO from unconsolidated joint ventures | 287 | 442 | — | 1,183 | — | |||||||||||||||
AFFO attributable to common shareholders | $ | 579,682 | $ | 557,793 | $ | 472,744 | $ | 1,672,180 | $ | 1,458,511 | ||||||||||
(14) | Following is how we reconcile from adjusted EBITDA to AFFO: | |||||||||||||||||||
Adjusted EBITDA | $ | 737,245 | $ | 720,041 | $ | 674,702 | $ | 2,141,496 | $ | 2,011,867 | ||||||||||
Adjustments: | ||||||||||||||||||||
Interest expense, net of interest income | (98,284) | (106,795) | (110,473) | (308,144) | (341,902) | |||||||||||||||
Amortization of deferred financing costs and debt discounts and premiums | 3,884 | 4,444 | 3,196 | 11,788 | 9,429 | |||||||||||||||
Income tax expense | (29,903) | (44,753) | (57,827) | (104,847) | (147,720) | |||||||||||||||
Income tax expense adjustment | 11,480 | 8,070 | 7,592 | 22,383 | 26,174 | |||||||||||||||
Straight-line rent expense adjustment | 3,019 | 2,395 | 2,716 | 7,220 | 7,394 | |||||||||||||||
Contract cost adjustment | (7,111) | (5,307) | (10,179) | (22,852) | (29,305) | |||||||||||||||
Installation revenue adjustment | (3,797) | 3,649 | 5,759 | (3,629) | 8,280 | |||||||||||||||
Recurring capital expenditures | (38,327) | (29,996) | (47,404) | (86,191) | (105,077) | |||||||||||||||
Other income | 162 | 4,278 | 3,428 | 9,610 | 15,442 | |||||||||||||||
(Gain) loss on disposition of real estate property | (1,313) | 376 | 732 | 1,569 | 3,421 | |||||||||||||||
Adjustments for unconsolidated JVs' and non-controlling interests | 842 | 1,049 | 39 | 2,849 | 45 | |||||||||||||||
Adjustment for gain on asset sales | 1,785 | 342 | 463 | 928 | 463 | |||||||||||||||
AFFO attributable to common shareholders | $ | 579,682 | $ | 557,793 | $ | 472,744 | $ | 1,672,180 | $ | 1,458,511 | ||||||||||
(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 | 88,806 | 87,303 | 85,012 | 87,226 | 83,753 | |||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||
Employee equity awards | 713 | 598 | 559 | 699 | 470 | |||||||||||||||
Shares used in computing diluted net income per share, FFO per share and AFFO per share | 89,519 | 87,901 | 85,571 | 87,925 | 84,223 | |||||||||||||||
Basic FFO per share | $ | 3.36 | $ | 4.09 | $ | 3.90 | $ | 11.45 | $ | 12.07 | ||||||||||
Diluted FFO per share | $ | 3.33 | $ | 4.06 | $ | 3.87 | $ | 11.36 | $ | 12.00 | ||||||||||
Basic AFFO per share | $ | 6.53 | $ | 6.39 | $ | 5.56 | $ | 19.17 | $ | 17.41 | ||||||||||
Diluted AFFO per share | $ | 6.48 | $ | 6.35 | $ | 5.52 | $ | 19.02 | $ | 17.32 | ||||||||||
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SOURCE Equinix, Inc.
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