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Equinix Reports First Quarter 2019 Results
Interconnection and Data Center Leader Delivers 65th Consecutive Quarter of Revenue Growth

REDWOOD CITY, Calif., May 1, 2019 /PRNewswire/ --

  • Quarterly revenues increased 12% year-over-year to $1.363 billion; an 11% year-over-year increase on a normalized and constant currency basis
  • Key customer wins and expansions included Hutchison 3G UK Limited, SpaceX and Tencent Holdings
  • Interconnection revenues continued to outpace colocation revenues in Q1 with total interconnections increasing to greater than 341,000
  • Completed the most recent phase of Equinix Cloud Exchange Fabric (ECX Fabric) to enable customers to interconnect their global businesses at the digital edge through connections across and between all three regions

Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported results for the quarter ended March 31, 2019. Equinix uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements. All per-share results are presented on a fully diluted basis.

First Quarter 2019 Results Summary

  • Revenues
    • $1.363 billion, a 4% increase over the previous quarter
  • Operating Income
    • $280 million, a 3% increase over the previous quarter, an operating margin of 21%
  • Adjusted EBITDA
    • $660 million, a 48% adjusted EBITDA margin, a 7% increase over the previous quarter
    • Includes $2 million of integration costs
  • Net Income and Net Income per Share attributable to Equinix
    • $118 million, a 7% increase over the previous quarter
    • $1.44 per share, a 6% increase over the previous quarter
  • AFFO and AFFO per Share
    • $488 million, an 18% increase over the previous quarter
    • $5.95 per share, a 16% increase over the previous quarter
    • Includes $2 million of integration costs

2019 Annual Guidance Summary

  • Revenues
    • $5.545 - $5.595 billion, a normalized and constant currency increase of 9% over the previous year at the mid-point
  • Adjusted EBITDA
    • $2.640 - $2.680 billion, a 47 - 48% adjusted EBITDA margin, and a normalized and constant currency increase of 9% over the previous year at the mid-point
    • Assumes $13 million of integration costs
  • AFFO and AFFO per Share
    • $1.880 - $1.910 billion, a normalized and constant currency increase of 13 - 14% over the previous year
    • $22.37 - 22.73 per share, a normalized and constant currency increase of 8 - 9% over the previous year, including the dilutive per share impact from the $1.2 billion follow-on equity raise in March 2019
    • Assumes $13 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:

"Equinix had a strong start to the year, delivering our best ever Q1 operating results including our largest ever quarter-over-quarter revenue step-up and our second-highest net bookings. Our bookings spanned more than 3,000 customers, with cross-border bookings up substantially year-over-year. We processed over 4,000 deals in the quarter, highlighting the diversity and high-volume nature of the Equinix retail colocation business. With our unmatched global reach, the industry's most comprehensive interconnection platform, an unparalleled track record of service excellence and an expanding portfolio of edge services, we remain confident in our ability to deliver superior value for our customers, allowing us to build on and extend our market leadership."

Business Highlights

  • With the completion of the most recent phase of the ECX Fabric build-out, Equinix continued its vision to evolve Platform Equinix® into a global platform that interconnects and integrates global businesses at the digital edge. ECX Fabric, an SDN-enabled interconnection service, now allows customers for the first time to establish on-demand network connections between the Americas, Europe and Asia-Pacific. The service, with more than 1,500 customers, enables companies to privately interconnect clouds, networks and services to global data centers at their digital edge, providing a critical component in their digital transformation efforts.
  • In March, Equinix announced adjustments to its organizational structure to globalize the company's operating model, scale the business and address the growing opportunity for Equinix as a strategic platform on which customers architect their digital business. This included moving three company veterans into new roles and concentrating all customer-facing functions into a single global organization. The moves will enable Equinix to deliver increasing value as a trusted advisor to businesses undergoing digital transformation.
  • In February, S&P Global Ratings upgraded all of Equinix's ratings by one level to the investment grade rating of "BBB-," including its issuer credit rating, its global multi-currency credit facility and term loan ratings, and all of the company's senior unsecured notes. The upgrade reflects increased confidence in its strategic operating performance, improved leverage levels and the company's demonstrated commitment to fund expansion in a disciplined and balanced manner. In the quarter, Equinix also received credit rating upgrades from Fitch Ratings by one level to "BB+" with a positive outlook and Moody's Investor Service by one level to "Ba2" with a stable outlook.
  • Equinix continued the growth of its indirect selling initiatives, with channel sales delivering more than 20% of the bookings for the quarter. This accounted for half of the new logos acquired in the quarter, driven by accelerated success in selling with key cloud and technology partners, including Cisco, Google, Microsoft and Oracle. Additional channel wins in Q1 came from AT&T and Anixter, an Equinix referral partner.

Business Outlook

For the second quarter of 2019, the Company expects revenues to range between $1.381 and $1.391 billion, an increase of 2% quarter-over-quarter, at the mid-point on both an as-reported and a normalized and constant currency basis. This guidance includes a positive foreign currency benefit of $1 million when compared to the average FX rates in Q1 2019. Adjusted EBITDA is expected to range between $649 and $659 million, which includes a minimal positive foreign currency benefit when compared to the average FX rates in Q1 2019 and $5 million of integration costs from acquisitions. Recurring capital expenditures are expected to range between $37 and $47 million.

For the full year of 2019, total revenues are expected to range between $5.545 and $5.595 billion, a 9 - 10% increase over the previous year or a normalized and constant currency increase of 9% at the mid-point. This $25 million increase from previously issued guidance is due to better than expected operating business performance of $24 million, partly due to elevated Q1 levels of non-recurring revenues and includes a $1 million positive foreign currency benefit when compared to prior guidance rates. Adjusted EBITDA is expected to range between $2.640 and $2.680 billion, an adjusted EBITDA margin of 47 - 48%. This $30 million increase from previously issued guidance is due to better than expected revenues and lower operating costs, and as a result, stronger than originally planned operating performance of $26 million, a $2 million reduction of integration costs and a $2 million positive foreign currency benefit when compared to prior guidance rates. AFFO is expected to range between $1.880 and $1.910 billion, a 13 - 15% increase over the previous year or a normalized and constant currency increase of 13 - 14%. This $45 million increase from previously issued guidance is primarily due to the increase in adjusted EBITDA, lower net interest expense and an $8 million positive foreign currency benefit when compared to prior guidance rates. AFFO per share is expected to range between $22.37 - 22.73, an 8 - 10% increase over the previous year or a normalized and constant currency increase of 8 - 9%, which includes the dilutive per share impact related to the $1.2 billion follow-on equity raise in March 2019. Non-recurring capital expenditures are expected to range between $1.730 and $1.920 billion, and recurring capital expenditures are expected to range between $170 and $180 million.

The U.S. dollar exchange rates used for 2019 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.16 to the Euro, $1.34 to the Pound, ¥111 to the U.S. dollar, S$1.36 to the U.S. dollar, and R$3.91 to the U.S. dollar. The Q1 2019 global revenue breakdown by currency for the Euro, British Pound, Japanese Yen, Singapore Dollar and Brazilian Real is 20%, 9%, 6%, 6% and 3%, respectively.

The adjusted EBITDA guidance is based on the revenue guidance less our expectations of cash cost of revenues and cash operating expenses. The AFFO guidance is based on the adjusted EBITDA guidance less our expectations of net interest expense, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, income tax expense, an income tax expense adjustment, recurring capital expenditures, other income (expense), (gains) losses on disposition of real estate property and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items.

Q1 2019 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended March 31, 2019, along with its future outlook, in its quarterly conference call on Wednesday, May 1, 2019, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live webcast of the call will be available on the Company's Investor Relations website at www.equinix.com/investors. To hear the conference call live, please dial 1-517-308-9482 (domestic and international) and reference the passcode EQIX.

A replay of the call will be available one hour after the call through Wednesday, July 31, 2019, by dialing 1-402-998-1687 and referencing the passcode 2019. 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, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most-interconnected data centers. On this global platform for digital business, companies come together across more than 50 markets on five continents to reach everywhere, interconnect everyone and integrate everything they need to create their digital futures.

Non-GAAP Financial Measures

Equinix provides all information required in accordance with generally accepted accounting principles ("GAAP"), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Equinix uses non-GAAP financial measures to evaluate its operations.

Equinix provides normalized and constant currency growth rates, which are calculated to adjust for acquisitions, dispositions, integration costs, changes in accounting principles and foreign currency.

Equinix presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents income or loss from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, acquisition 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, acquisition 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 acquisition costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The acquisition costs relate to costs Equinix incurs in connection with business combinations. 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 acquisitions. Management believes items such as restructuring charges, impairment charges, acquisition costs and gain or loss on asset sales are non-core transactions; however, these types of costs may occur in future periods.

Equinix also presents funds from operations ("FFO") and adjusted funds from operations ("AFFO"), both commonly used in the REIT industry, as supplemental performance measures. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income or loss, excluding gain or loss from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. AFFO represents FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition 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 acquisition costs for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.

Equinix includes an adjustment for revenues from installation fees, since installation fees are deferred and recognized ratably over the period of contract term, although the fees are generally paid in a lump sum upon installation. Equinix includes an adjustment for straight-line rent expense on its operating leases, since the total minimum lease payments are recognized ratably over the lease term, although the lease payments generally increase over the lease term. Equinix also includes an adjustment to contract costs incurred to obtain contracts, since contract costs are capitalized and amortized over the estimated period of benefit on a straight-line basis, although costs of obtaining contracts are generally incurred and paid during the period of obtaining the contracts. The adjustments for installation revenues, straight-line rent expense and contract costs are intended to isolate the cash activity included within the straight-lined or amortized results in the consolidated statement of operations. Equinix excludes the amortization of deferred financing costs and debt discounts and premiums as these expenses relate to the initial costs incurred in connection with its debt financings that have no current or future cash obligations. Equinix excludes gain or loss on debt extinguishment since it represents a cost that is not a good indicator of Equinix's current or future operating performance. Equinix includes an income tax expense adjustment, which represents the non-cash tax impact due to changes in valuation allowances and uncertain tax positions that do not relate to the current period's operations. Equinix excludes recurring capital expenditures, which represent expenditures to extend the useful life of its IBX data centers or other assets that are required to support current revenues. Equinix also excludes net income or loss from discontinued operations, net of tax, which represents results that are not a good indicator of our current or future operating performance.

Equinix presents constant currency results of operations, which is a non-GAAP financial measure and is not meant to be considered in isolation or as an alternative to GAAP results of operations. However, Equinix has presented this non-GAAP financial measure to provide investors with an additional tool to evaluate its operating results without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Equinix's business performance. To present this information, Equinix's current and comparative prior period revenues and certain operating expenses from entities with functional currencies other than the U.S. dollar are converted into U.S. dollars at a consistent exchange rate for purposes of each result being compared.

Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP. Non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Equinix presents such non-GAAP financial measures to provide investors with an additional tool to evaluate its operating results in a manner that focuses on what management believes to be its core, ongoing business operations.  Management believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods. Equinix believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze Equinix effectively.

Investors should note that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as those of other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by us to similarly titled non-GAAP financial measures of other companies. Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income or loss from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX data centers and developing, deploying and delivering Equinix products and solutions; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenues from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; risks related to our taxation as a REIT; and other risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent Equinix quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.

EQUINIX, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



Three Months Ended


March 31,
2019


December 31,
2018


March 31,
2018

Recurring revenues

$

1,274,828



$

1,230,318



$

1,150,629


Non-recurring revenues

88,390



79,765



65,248


Revenues

1,363,218



1,310,083



1,215,877


Cost of revenues

682,030



670,935



622,430


Gross profit

681,188



639,148



593,447


Operating expenses:






Sales and marketing

169,715



161,804



159,776


General and administrative

215,046



206,146



203,157


Acquisition costs

2,471



481



4,639


Impairment charges

14,448






Total operating expenses

401,680



368,431



367,572


Income from operations

279,508



270,717



225,875


Interest and other income (expense):





Interest income

4,202



3,002



4,610


Interest expense

(122,846)



(129,978)



(126,277)


Other income (expense)

(166)



4,498



(3,064)


Loss on debt extinguishment

(382)



(12,163)



(21,491)


Total interest and other, net

(119,192)



(134,641)



(146,222)


Income before income taxes

160,316



136,076



79,653


Income tax expense

(42,569)



(26,054)



(16,759)


Net income

117,747



110,022



62,894


Net loss attributable to non-controlling interests

331






Net income attributable to Equinix

$

118,078



$

110,022



$

62,894


Net income per share attributable to Equinix:






Basic net income per share

$

1.44



$

1.37



$

0.79


Diluted net income per share

$

1.44



$

1.36



$

0.79


Shares used in computing basic net income per share

81,814



80,509



79,241


Shares used in computing diluted net income per share

82,090



80,740



79,649








 

EQUINIX, INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



Three Months Ended


March 31,
2019


December 31,
2018


March 31,
2018

Net income

$

117,747



$

110,022



$

62,894


Other comprehensive income (loss), net of tax:






Foreign currency translation adjustment ("CTA") gain (loss)

(81,719)



(68,795)



145,851


Net investment hedge CTA gain (loss)

76,850



38,934



(72,635)


Unrealized gain (loss) on cash flow hedges

8,224



6,287



(4,080)


Net actuarial gain (loss) on defined benefit plans

(11)



20



8


Total other comprehensive income (loss), net of tax

3,344



(23,554)



69,144


Comprehensive income, net of tax

121,091



86,468



132,038


Net loss attributable to non-controlling interests

331






Other comprehensive income attributable to non-controlling interests

(7)






Comprehensive income attributable to Equinix

$

121,415



$

86,468



$

132,038


 

EQUINIX, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



March 31, 2019


December 31, 2018

Assets




Cash and cash equivalents

$

1,633,844



$

606,166


Short-term investments

13,833



4,540


Accounts receivable, net

703,835



630,119


Other current assets

274,259



274,857


          Total current assets

2,625,771



1,515,682


Property, plant and equipment, net

10,898,210



11,026,020


Operating lease right-of-use assets

1,457,822




Goodwill

4,808,085



4,836,388


Intangible assets, net

2,243,106



2,333,296


Other assets

458,097



533,252


          Total assets

$

22,491,091



$

20,244,638


Liabilities and Stockholders' Equity




Accounts payable and accrued expenses

$

746,771



$

756,692


Accrued property, plant and equipment

263,141



179,412


Current portion of operating lease liabilities

132,162




Current portion of finance lease liabilities

56,024



77,844


Current portion of mortgage and loans payable

72,796



73,129


Current portion of senior notes

300,488



300,999


Other current liabilities

113,969



126,995


          Total current liabilities

1,685,351



1,515,071


Operating lease liabilities, less current portion

1,316,522




Finance lease liabilities, less current portion

1,166,234



1,441,077


Mortgage and loans payable, less current portion

1,286,749



1,310,663


Senior notes, less current portion

8,067,385



8,128,785


Other liabilities

544,062



629,763


          Total liabilities

14,066,303



13,025,359


Common stock

84



81


Additional paid-in capital

12,043,056



10,751,313


Treasury stock

(144,801)



(145,161)


Accumulated dividends

(3,532,915)



(3,331,200)


Accumulated other comprehensive loss

(942,365)



(945,702)


Retained earnings

1,002,053



889,948


          Total Equinix stockholders' equity

8,425,112



7,219,279


Non-controlling interests

(324)




          Total stockholders' equity

8,424,788



7,219,279


                Total liabilities and stockholders' equity

$

22,491,091



$

20,244,638






Ending headcount by geographic region is as follows:




          Americas headcount

3,495



3,480


          EMEA headcount

2,785



2,751


          Asia-Pacific headcount

1,632



1,672


                    Total headcount

7,912



7,903


 

EQUINIX, INC.

Summary of Debt Principal Outstanding

(in thousands)

(unaudited)



March 31, 2019


December 31, 2018





Finance lease liabilities

$

1,222,258



$

1,518,921






Term loans

1,315,266



1,337,868


Mortgage payable and other loans payable

44,279



45,924


Plus: debt discount and issuance costs, net

4,280



4,732


           Total mortgage and loans payable principal

1,363,825



1,388,524






Senior notes

8,367,873



8,429,784


Plus: debt issuance costs

71,578



75,372


Less: debt premium

(3,951)



(5,031)


          Total senior notes principal

8,435,500



8,500,125






Total debt principal outstanding

$

11,021,583



$

11,407,570


 

EQUINIX, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)




Three Months Ended



March 31,
2019


December 31,
2018


March 31,
2018








Cash flows from operating activities:


Net income

$

117,747



$

110,022



$

62,894



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


Depreciation, amortization and accretion

314,705



305,130



306,465



Stock-based compensation

49,023



40,867



42,536



Amortization of debt issuance costs and debt discounts and premiums

2,995



3,009



4,099



Loss on debt extinguishment

382



12,163



21,491



Impairment charges

14,448







Other items

8,224



10,704



8,888



Changes in operating assets and liabilities:


Accounts receivable

(84,350)



32,195



(71,275)



Income taxes, net

15,825



22,206



(15,381)



Accounts payable and accrued expenses

(11,463)



30,713



(35,143)



Operating lease right-of-use assets

41,264







Operating lease liabilities

(38,886)







Other assets and liabilities

(8,773)



(8,380)



(23,667)


Net cash provided by operating activities

421,141



558,629



300,907


Cash flows from investing activities:


Purchases, sales and maturities of investments, net

(8,779)



1,402



(497)



Business acquisitions, net of cash and restricted cash acquired



(502)





Purchases of real estate

(5,721)



(45,806)



(14,700)



Purchases of other property, plant and equipment

(363,967)



(680,665)



(349,729)


Net cash used in investing activities

(378,467)



(725,571)



(364,926)


Cash flows from financing activities:


Proceeds from employee equity awards

27,593



33



25,847



Payment of dividend distributions

(204,603)



(183,858)



(186,999)



Proceeds from public offering of common stock, net of offering costs

1,213,434



114,299





Proceeds from senior notes





929,850



Repayment of finance lease liabilities

(31,158)



(14,119)



(55,787)



Repayment of mortgage and loans payable

(18,334)



(17,975)



(6,599)



Debt extinguishment costs





(20,704)



Debt issuance costs





(11,583)



Other financing activities



725




Net cash provided by (used in) financing activities

986,932



(100,895)



674,025


Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

(1,695)



(2,963)



7,903


Net increase (decrease) in cash, cash equivalents and restricted cash

1,027,911



(270,800)



617,909


Cash, cash equivalents and restricted cash at beginning of period

627,604



898,404



1,450,701


Cash, cash equivalents and restricted cash at end of period

$

1,655,515



$

627,604



$

2,068,610


Supplemental cash flow information:

Cash paid for taxes

$

27,024



$

15,727



$

31,761


Cash paid for interest

$

146,144



$

121,797



$

107,057









Free cash flow (negative free cash flow) (1)

$

51,453



$

(168,344)



$

(63,522)









Adjusted free cash flow (adjusted negative free cash flow) (2)

$

57,174



$

(122,036)



$

(48,822)























(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

$

421,141



$

558,629



$

300,907



Net cash used in investing activities as presented above

(378,467)



(725,571)



(364,926)



Purchases, sales and maturities of investments, net

8,779



(1,402)



497



Free cash flow (negative free cash flow)

$

51,453



$

(168,344)



$

(63,522)
















(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

$

51,453



$

(168,344)



$

(63,522)



Less business acquisitions, net of cash and restricted cash acquired



502





Less purchases of real estate

5,721



45,806



14,700



Adjusted free cash flow (adjusted negative free cash flow)

$

57,174



$

(122,036)



$

(48,822)









 

EQUINIX, INC.

Non-GAAP Measures and Other Supplemental Data

(in thousands)

(unaudited)




Three Months Ended



March 31,
2019


December 31,
2018


March 31,
2018


Recurring revenues

$

1,274,828



$

1,230,318



$

1,150,629



Non-recurring revenues

88,390



79,765



65,248



Revenues (1)

1,363,218



1,310,083



1,215,877










Cash cost of revenues (2)

448,381



445,995



395,522



Cash gross profit (3)

914,837



864,088



820,355










Cash operating expenses (4)(7):






Cash sales and marketing expenses (5)

108,216



99,613



98,069



Cash general and administrative expenses(6)

146,466



147,280



142,771



Total cash operating expenses (4) (7)

254,682



246,893



240,840










Adjusted EBITDA (8)

$

660,155



$

617,195



$

579,515










Cash gross margins (9)

67

%


66

%


67

%









Adjusted EBITDA margins (10)

48

%


47

%


48

%









Adjusted EBITDA flow-through rate (11)

81

%


18

%


94

%









FFO (12)

$

326,073



$

332,810



$

290,755










AFFO (13) (14)

$

488,120



$

414,145



$

414,576










Basic FFO per share (15)

$

3.99



$

4.13



$

3.67










Diluted FFO per share (15)

$

3.97



$

4.12



$

3.65










Basic AFFO per share (15)

$

5.97



$

5.14



$

5.23










Diluted AFFO per share (15)

$

5.95



$

5.13



$

5.21
















(1)

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









Americas Revenues:














Colocation

$

439,981



$

438,150



$

427,125



Interconnection

138,563



137,031



129,253



Managed infrastructure

21,787



20,070



18,535



Other

5,979



5,350



1,079



Recurring revenues

606,310



600,601



575,992



Non-recurring revenues

38,056



37,547



26,635



Revenues

$

644,366



$

638,148



$

602,627










EMEA Revenues:














Colocation

$

331,125



$

315,118



$

288,061



Interconnection

37,525



35,288



34,977



Managed infrastructure

29,088



29,881



30,686



Other

2,499



1,482



1,766



Recurring revenues

400,237



381,769



355,490



Non-recurring revenues

34,423



21,315



24,140



Revenues

$

434,660



$

403,084



$

379,630










Asia-Pacific Revenues:














Colocation

$

209,665



$

191,891



$

166,198



Interconnection

36,696



34,917



30,769



Managed infrastructure

21,920



21,140



22,180



Recurring revenues

268,281



247,948



219,147



Non-recurring revenues

15,911



20,903



14,473



Revenues

$

284,192



$

268,851



$

233,620










Worldwide Revenues:














Colocation

$

980,771



$

945,159



$

881,384



Interconnection

212,784



207,236



194,999



Managed infrastructure

72,795



71,091



71,401



Other

8,478



6,832



2,845



Recurring revenues

1,274,828



1,230,318



1,150,629



Non-recurring revenues

88,390



79,765



65,248



Revenues

$

1,363,218



$

1,310,083



$

1,215,877









(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

$

682,030



$

670,935



$

622,430



Depreciation, amortization and accretion expense

(228,637)



(219,799)



(223,009)



Stock-based compensation expense

(5,012)



(5,141)



(3,899)



Cash cost of revenues

$

448,381



$

445,995



$

395,522










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









Americas cash cost of revenues

$

179,635



$

184,545



$

164,255



EMEA cash cost of revenues

173,201



161,781



152,814



Asia-Pacific cash cost of revenues

95,545



99,669



78,453



Cash cost of revenues

$

448,381



$

445,995



$

395,522



(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

$

384,761



$

367,950



$

362,933



Depreciation and amortization expense

(86,068)



(85,331)



(83,456)



Stock-based compensation expense

(44,011)



(35,726)



(38,637)



Cash operating expense

$

254,682



$

246,893



$

240,840









(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

$

169,715



$

161,804



$

159,776



Depreciation and amortization expense

(48,198)



(48,723)



(50,001)



Stock-based compensation expense

(13,301)



(13,468)



(11,706)



Cash sales and marketing expense

$

108,216



$

99,613



$

98,069









(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

$

215,046



$

206,146



$

203,157



Depreciation and amortization expense

(37,870)



(36,608)



(33,455)



Stock-based compensation expense

(30,710)



(22,258)



(26,931)



Cash general and administrative expense

$

146,466



$

147,280



$

142,771









(7)

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









Americas cash SG&A

$

156,893



$

151,279



$

146,823



EMEA cash SG&A

62,387



59,813



60,638



Asia-Pacific cash SG&A

35,402



35,801



33,379



Cash SG&A

$

254,682



$

246,893



$

240,840









(8)

We define adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition costs and gain or loss on asset sales as presented below:









Income from operations

$

279,508



$

270,717



$

225,875



Depreciation, amortization and accretion expense

314,705



305,130



306,465



Stock-based compensation expense

49,023



40,867



42,536



Impairment charges

14,448







Acquisition costs

2,471



481



4,639



Adjusted EBITDA

$

660,155



$

617,195



$

579,515










The geographic split of our adjusted EBITDA is presented below:









Americas income from operations

$

90,011



$

116,627



$

101,736



Americas depreciation, amortization and accretion expense

167,136



159,762



158,026



Americas stock-based compensation expense

34,171



25,662



29,877



Americas impairment charges

14,448







Americas acquisition costs

2,072



273



1,910



Americas adjusted EBITDA

$

307,838



$

302,324



$

291,549










EMEA income from operations

$

105,007



$

86,184



$

64,103



EMEA depreciation, amortization and accretion expense

84,547



85,731



92,492



EMEA stock-based compensation expense

8,863



8,779



7,139



EMEA acquisition costs

655



796



2,444



EMEA adjusted EBITDA

$

199,072



$

181,490



$

166,178

















Asia-Pacific income from operations

$

84,490



$

67,906



$

60,036



Asia-Pacific depreciation, amortization and accretion expense

63,022



59,637



55,947



Asia-Pacific stock-based compensation expense

5,989



6,426



5,520



Asia-Pacific acquisition costs

(256)



(588)



285



Asia-Pacific adjusted EBITDA

$

153,245



$

133,381



$

121,788









(9)

We define cash gross margins as cash gross profit divided by revenues.









Our cash gross margins by geographic region is presented below:









Americas cash gross margins

72

%


71

%


73

%


EMEA cash gross margins

60

%


60

%


60

%


Asia-Pacific cash gross margins

66

%


63

%


66

%








(10)

We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.









Americas adjusted EBITDA margins

48

%


47

%


48

%


EMEA adjusted EBITDA margins

46

%


45

%


44

%


Asia-Pacific adjusted EBITDA margins

54

%


50

%


52

%


(11)

We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as follows:









Adjusted EBITDA - current period

$

660,155



$

617,195



$

579,515



Less adjusted EBITDA - prior period

(617,195)



(612,526)



(564,840)



Adjusted EBITDA growth

$

42,960



$

4,669



$

14,675










Revenues - current period

$

1,363,218



$

1,310,083



$

1,215,877



Less revenues - prior period

(1,310,083)



(1,283,751)



(1,200,221)



Revenue growth

$

53,135



$

26,332



$

15,656










Adjusted EBITDA flow-through rate

81

%


18

%


94

%








(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

$

117,747



$

110,022



$

62,894



Net loss attributable to non-controlling interests

331







Net income attributable to Equinix

118,078



110,022



62,894



Adjustments:







Real estate depreciation

205,649



219,217



222,855



Loss on disposition of real estate property

2,346



3,571



5,006



FFO attributable to common shareholders

$

326,073



$

332,810



$

290,755









(13)

AFFO is defined as FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition 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

$

326,073



$

332,810



$

290,755



Adjustments:







Installation revenue adjustment

1,029



4,650



2,159



Straight-line rent expense adjustment

2,378



1,687



2,301



Amortization of deferred financing costs and debt discounts and premiums

2,995



3,009



4,099



Contract cost adjustment

(6,778)



(7,348)



(3,355)



Stock-based compensation expense

49,023



40,867



42,536



Non-real estate depreciation expense

57,994



37,674



34,097



Amortization expense

49,535



49,973



50,616



Accretion expense (adjustment)

1,527



(1,734)



(1,103)



Recurring capital expenditures

(20,947)



(70,234)



(35,231)



Loss on debt extinguishment

382



12,163



21,491



Acquisition costs

2,471



481



4,639



Impairment charges

14,448







Income tax expense adjustment

7,990



10,147



1,572



AFFO attributable to common shareholders

$

488,120



$

414,145



$

414,576









(14)

 Following is how we reconcile from adjusted EBITDA to AFFO:



Adjusted EBITDA

$

660,155



$

617,195



$

579,515



Adjustments:







Interest expense, net of interest income

(118,644)



(126,976)



(121,667)



Amortization of deferred financing costs and debt discounts and premiums

2,995



3,009



4,099



Income tax expense

(42,569)



(26,054)



(16,759)



Income tax expense adjustment

7,990



10,147



1,572



Straight-line rent expense adjustment

2,378



1,687



2,301



Contract cost adjustment

(6,778)



(7,348)



(3,355)



Installation revenue adjustment

1,029



4,650



2,159



Recurring capital expenditures

(20,947)



(70,234)



(35,231)



Other income (expense)

(166)



4,498



(3,064)



Loss on disposition of real estate property

2,346



3,571



5,006



Adjustments for unconsolidated JVs' and non-controlling interests

331







AFFO attributable to common shareholders

$

488,120



$

414,145



$

414,576









(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

81,814



80,509



79,241



Effect of dilutive securities:







Employee equity awards

276



231



408



Shares used in computing diluted net income per share, FFO per share and AFFO per share

82,090



80,740



79,649










Basic FFO per share

$

3.99



$

4.13



$

3.67



Diluted FFO per share

$

3.97



$

4.12



$

3.65










Basic AFFO per share

$

5.97



$

5.14



$

5.23



Diluted AFFO per share

$

5.95



$

5.13



$

5.21









 

Equinix.  (PRNewsFoto/Equinix) (PRNewsfoto/Equinix, Inc.)

 

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SOURCE Equinix, Inc.

Equinix Investor Relations Contacts: Katrina Rymill, Equinix, Inc., (650) 598-6583, krymill@equinix.com, OR Chip Newcom, Equinix, Inc., (650) 598-6262, cnewcom@equinix.com, OR Equinix Media Contact: David Fonkalsrud, Equinix, Inc., (650) 598-6240, dfonkalsrud@equinix.com