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Equinix Reports Fourth Quarter And Full Year 2019 Results
Interconnection and Data Center Leader Delivers 68th Consecutive Quarter of Revenue Growth

REDWOOD CITY, Calif., Feb. 12, 2020 /PRNewswire/ --

  • Delivered 2019 annual revenues increase of 10% year-over-year to $5.562 billion. This reflects a 9% year-over-year increase on a normalized and constant currency basis
  • Named a leader in the first-ever IDC MarketScape report for Worldwide Colocation and Interconnection Services
  • Customer deployments across multiple metros increased to 87% of total recurring revenues, demonstrating the value of the Equinix global platform
  • Appointed Adaire Fox-Martin to Board of Directors

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

2019 Results Summary

  • Revenues
    • $5.562 billion, a 10% increase over the previous year or a normalized and constant currency increase of 9%
  • Operating Income
    • $1.170 billion, a 20% increase over the previous year, and an operating margin of 21%
  • Adjusted EBITDA
    • $2.688 billion, a 48% adjusted EBITDA margin
    • Includes $9 million of integration costs
  • Net Income and Net Income per Share attributable to Equinix
    • $507 million, a 39% increase over the previous year
    • $5.99 per share, a 31% increase over the previous year
  • AFFO and AFFO per Share
    • $1.931 billion, a 16% increase over the previous year or 13% on a normalized and constant currency basis
    • $22.81 per share, a 10% increase over the previous year or 8% on a normalized and constant currency basis
    • Includes $9 million of integration costs

2020 Annual Guidance Summary

  • Revenues
    • $6.000 - $6.050 billion, an 8 - 9% increase over the previous year, both on an as-reported and normalized and constant currency basis
  • Adjusted EBITDA
    • $2.858 - $2.908 billion, a 48% adjusted EBITDA margin
    • Assumes $10 million of integration costs
  • AFFO and AFFO per Share
    • $2.108 - $2.158 billion, an increase of 9 - 12% over the previous year or a normalized and constant currency increase of 11 - 14%
    • $24.42 - $25.00 per share, an increase of 7 - 10% over the previous year or a normalized and constant currency increase of 9 - 11%
    • Assumes $10 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:

"2019 was a great year for Equinix, delivering $5.6 billion of revenue, ahead of our expectations, as we continue to drive value on both the top-line and at the per-share level. The pace of digital transformation continues to accelerate, creating seismic shifts across industries as businesses embrace interconnection as critical to their infrastructure strategy, and adopt hybrid and multicloud as the clear architecture of choice. In 2020, we will continue our focus on evolving Platform Equinix, adding new capabilities and service offerings to meet the digital transformation needs of our customers, expanding our global reach and scaling our go-to-market engine to execute on the opportunity ahead. We are excited about the year ahead and continuing to build a company that is simultaneously driving great business results and positively impacting our world."

Business Highlights

  • Equinix continues to progress its vision to evolve Platform Equinix® into a global platform that interconnects and integrates global businesses at the digital edge. On January 14, 2020, Equinix announced it signed a definitive agreement to acquire Packet, the leading bare metal automation platform. Equinix intends to leverage the Packet offering to accelerate the development and delivery of its interconnected edge services. By integrating Packet's innovative and developer-oriented bare metal service offering, Equinix intends to create a world-class, enterprise-grade bare metal offering that will allow customers to rapidly deploy digital infrastructure, within minutes, at global scale.
  • In January, Equinix was named a leader in IDC's first-ever assessment of the colocation and interconnection services vendor market using the IDC MarketScape model. The IDC MarketScape report for Worldwide Colocation and Interconnection Services 2019-2020 vendor assessment (doc #US4517419, December 2019) is a key milestone in the evolution of the data center and networking industry, as it reflects the demand for colocation and interconnection. The recognition of Equinix as a leader in this report underscores the value of Platform Equinix and highlights the competitive advantages that Equinix has over its competitors.
  • Equinix continued to expand the reach of its global platform and currently operates across 55 metros in 26 countries including the recently completed acquisition of three Axtel data centers that serve two new strategic technology metros in Mexico. And, the company plans to build out new markets in Hamburg and Muscat this year. The benefit of this unparalleled reach is reflected in strong cross-regional activity with customer deployments across multiple metros increasing to 87% of total recurring revenues.
  • Interconnection revenues grew 13% year-over-year on an as-reported basis and 14% on a normalized and constant currency basis, driven by strong customer response to Equinix Cloud Exchange Fabric™ (ECX Fabric™), good traction in new internet exchange markets, and solid interconnection net adds. Today, Equinix has the most comprehensive global interconnection platform, now comprising over 363,000 physical and virtual interconnections. The company delivered its twelfth consecutive quarter of adding more interconnections than the rest of its top 10 competitors combined. In Q4, Equinix added an incremental 7,400 interconnections, fueled by high gross adds from new streaming services, expanding inter-metro connections, and seasonably lower churn. Peak internet exchange traffic grew by 10% this quarter, helped by new OTT video offerings.
  • Equinix achieved its second best gross and net bookings this quarter with strong performance across all three regions (Americas, EMEA and Asia-Pacific) and notable momentum in Asia-Pacific. In 2019, Equinix closed over 17,000 deals, demonstrating the tremendous scale of the company's go-to-market engine and the differentiated nature of the Equinix value proposition. In Q4, Equinix achieved a record number of new wins across multiple verticals. The content and digital media vertical experienced record bookings led by Asia-Pacific and strength in the gaming, publishing and eCommerce sectors as digital transformation continues to shape this vertical. The financial services vertical achieved its third highest bookings led by capital markets providers and multinational financials as cloud adoption accelerates.
  • Equinix continues to make significant progress with the company's hyperscale strategy with six announced projects underway across all three regions and a strong pipeline of customer demand. In Q4, Equinix announced the completion of the formation of the greater than US$1.0 billion joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund, to develop and operate xScaledata centers in Europe. Equinix is advancing additional joint venture conversations in Japan and other targeted geographies.
  • Equinix's financial strength remains a significant and strategic advantage. Equinix leveraged the company's newly achieved investment-grade rating to reduce its interest burden as demonstrated by raising $2.8 billion in debt during Q4 to refinance a portion of the company's outstanding high-yield debt at more favorable rates.

Business Outlook

For the first quarter of 2020, Equinix expects revenues to range between $1.450 and $1.460 billion, an increase of 3% quarter-over-quarter at the midpoint or 2% on a normalized and constant currency basis. This guidance includes a foreign currency benefit of $4 million when compared to the average FX rates in Q4 2019 and $5 million in revenues from the Axtel acquisition. Adjusted EBITDA is expected to range between $686 and $696 million, which includes a $2 million foreign currency benefit when compared to the average FX rates in Q4 2019. Adjusted EBITDA includes $4 million of integration costs related to acquisitions. Recurring capital expenditures are expected to range between $19 and $29 million.

For the full year of 2020, total revenues are expected to range between $6.000 and $6.050 billion, an 8 - 9% increase over the previous year, on both an as-reported and normalized and constant currency basis. This guidance includes a negative foreign currency impact of $12 million when compared to the average FX rates in 2019 and $18 - $22 million in revenues from the Axtel acquisition. Adjusted EBITDA is expected to range between $2.858 and $2.908 billion, an adjusted EBITDA margin of 48%. This adjusted EBITDA includes a negative foreign currency impact of $8 million when compared to the average FX rates in 2019, higher utilities and property tax expenses and strategic investments in Go-to-Market and Product initiatives. For the year, the company expects to incur $10 million in integration costs related to acquisitions. AFFO is expected to range between $2.108 and $2.158 billion, an increase of 9 - 12% over the previous year, or a normalized and constant currency increase of 11 - 14%. This AFFO guidance includes $10 million in integration costs related to acquisitions. AFFO per share is expected to range between $24.42 and $25.00, an increase of 9 - 11% over the previous year, on a normalized and constant currency basis. Non-recurring capital expenditures are expected to range between $1.880 and $2.070 billion and recurring capital expenditures are expected to range between $170 and $180 million.

The U.S. dollar exchange rates used for 2020 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.15 to the Euro, $1.32 to the Pound, S$1.34 to the U.S. dollar, ¥109 to the U.S. dollar and R$4.02 to the U.S. dollar. The Q4 2019 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 20%, 9%, 7%, 6% and 3%, respectively.

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

Q4 2019 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended December 31, 2019, along with its future outlook, in its quarterly conference call on Wednesday, February 12, 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, May 6, 2020, by dialing 1-203-369-3370 and entering passcode (2020). In addition, the webcast will be available on the company's website at www.equinix.com/investors (no password required).

Investor Presentation and Supplemental Financial Information

Equinix has made available on its website a presentation designed to accompany the discussion of Equinix's results and future outlook, along with certain supplemental financial information and other data. Interested parties may access this information through the Equinix Investor Relations website at www.equinix.com/investors.

Additional Resources

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, transaction costs and gain or loss on asset sales.

In presenting non-GAAP financial measures, such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), adjusted EBITDA margins, free cash flow and adjusted free cash flow, Equinix excludes certain items that it believes are not good indicators of Equinix's current or future operating performance. These items are depreciation, amortization, accretion of asset retirement obligations and accrued restructuring charges, stock-based compensation, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales.  Equinix excludes these items in order for its lenders, investors and the industry analysts who review and report on Equinix to better evaluate Equinix's operating performance and cash spending levels relative to its industry sector and competitors.

Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of an IBX® data center, and do not reflect its current or future cash spending levels to support its business. Its IBX data centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of an IBX data center do not recur with respect to such data center, although Equinix may incur initial construction costs in future periods with respect to additional IBX data centers, and future capital expenditures remain minor relative to the initial investment. This is a trend it expects to continue. In addition, depreciation is also based on the estimated useful lives of the IBX data centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX data centers and are not indicative of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations.

In addition, in presenting the non-GAAP financial measures, Equinix also excludes amortization expense related to acquired intangible assets. Amortization expense is significantly affected by the timing and magnitude of acquisitions and these charges may vary in amount from period to period. We exclude amortization expense to facilitate a more meaningful evaluation of our current operating performance and comparisons to our prior periods. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charges, as these expenses represent costs which Equinix also believes are not meaningful in evaluating Equinix's current operations. Equinix excludes stock-based compensation expense, as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, Equinix and many investors and analysts exclude stock-based compensation expense to compare its operating results with those of other companies. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to Equinix's decision to exit leases for excess space adjacent to several of its IBX data centers, which it did not intend to build out, or its decision to reverse such restructuring charges. Equinix also excludes impairment charges related to certain long-lived assets. The impairment charges are related to expense recognized whenever events or changes in circumstances indicate that the carrying amount of long-lived assets are not recoverable. Equinix also excludes gain or loss on asset sales as it represents profit or loss that is not meaningful in evaluating the current or future operating performance. Finally, Equinix excludes transaction costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The transaction costs relate to costs Equinix incurs in connection with business combinations and formation of joint ventures, including advisory, legal, accounting, valuation and other professional or consulting fees. Such charges generally are not relevant to assessing the long-term performance of Equinix. In addition, the frequency and amount of such charges vary significantly based on the size and timing of the transactions. Management believes items such as restructuring charges, impairment charges, transaction costs and gain or loss on asset sales are non-core transactions; however, these types of costs may occur in future periods.

Equinix also presents funds from operations ("FFO") and adjusted funds from operations ("AFFO"), both commonly used in the REIT industry, as supplemental performance measures. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income or loss, excluding gain or loss from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. AFFO represents FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, gain or loss on debt extinguishment, an income tax expense adjustment, recurring capital expenditures, net income or loss from discontinued operations, net of tax and adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items. Equinix excludes depreciation expense, amortization expense, accretion, stock-based compensation, restructuring charges, impairment charges and transaction costs for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.

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

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

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

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

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, 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


Twelve Months Ended


December 31,
2019


September 30,
2019


December 31,
2018


December 31,
2019


December 31,
2018

Recurring revenues

$

1,337,977



$

1,319,336



$

1,230,318



$

5,238,186



$

4,776,502


Non-recurring revenues

79,158



77,474



79,765



323,954



295,152


Revenues

1,417,135



1,396,810



1,310,083



5,562,140



5,071,654


Cost of revenues

725,636



704,339



670,935



2,810,184



2,605,475


Gross profit

691,499



692,471



639,148



2,751,956



2,466,179


Operating expenses:










Sales and marketing

160,556



161,574



161,804



651,046



633,702


General and administrative

245,504



241,812



206,146



935,018



826,694


Transaction costs

16,545



2,991



481



24,781



34,413


Impairment charges

(233)



1,189





15,790




Gain on asset sales

(43,847)



(463)





(44,310)



(6,013)


Total operating expenses

378,525



407,103



368,431



1,582,325



1,488,796


Income from operations

312,974



285,368



270,717



1,169,631



977,383


Interest and other income (expense):










Interest income

7,532



8,201



3,002



27,697



14,482


Interest expense

(117,617)



(118,674)



(129,978)



(479,684)



(521,494)


Other income

12,336



3,428



4,498



27,778



14,044


Gain (loss) on debt extinguishment

(52,758)



315



(12,163)



(52,825)



(51,377)


Total interest and other, net

(150,507)



(106,730)



(134,641)



(477,034)



(544,345)


Income before income taxes

162,467



178,638



136,076



692,597



433,038


Income tax expense

(37,632)



(57,827)



(26,054)



(185,352)



(67,679)


Net income

124,835



120,811



110,022



507,245



365,359


Net loss attributable to non-controlling interests

160



39





205




Net income attributable to Equinix

$

124,995



$

120,850



$

110,022



$

507,450



$

365,359


Net income per share attributable to Equinix:







Basic net income per share

$

1.47



$

1.42



$

1.37



$

6.03



$

4.58


Diluted net income per share

$

1.46



$

1.41



$

1.36



$

5.99



$

4.56


Shares used in computing basic net income per share

85,289



85,012



80,509



84,140



79,779


Shares used in computing diluted net income per share

85,831



85,571



80,740



84,679



80,197












 

EQUINIX, INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



Three Months Ended


Twelve Months Ended


December 31,
2019


September 30,
2019


December 31,
2018


December 31,
2019


December 31,
2018

Net income

$

124,835



$

120,811



$

110,022



$

507,245



$

365,359


Other comprehensive income (loss), net of tax:

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

283,185



(284,927)



(68,795)



(58,334)



(421,743)


Unrealized gain (loss) on cash flow hedges

(22,928)



14,217



6,287



(3,842)



43,671


Net investment hedge CTA gain (loss)

(154,596)



188,897



38,934



73,294



219,628


Net actuarial gain (loss) on defined benefit plans

(22)



(8)



20



(48)



55


Total other comprehensive income (loss), net of tax

105,639



(81,821)



(23,554)



11,070



(158,389)


Comprehensive income, net of tax

230,474



38,990



86,468



518,315



206,970


Net loss attributable to non-controlling interests

160



39





205




Other comprehensive (income) loss attributable to non-controlling interests

(16)



28





19




Comprehensive income attributable to Equinix

$

230,618



$

39,057



$

86,468



$

518,539



$

206,970


 

EQUINIX, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



December 31, 2019


December 31, 2018

Assets




Cash and cash equivalents

$

1,869,577



$

606,166


Short-term investments

10,362



4,540


Accounts receivable, net

689,134



630,119


Other current assets

303,543



274,857


Total current assets

2,872,616



1,515,682


Property, plant and equipment, net

12,152,597



11,026,020


Operating lease right-of-use assets

1,475,367




Goodwill

4,781,858



4,836,388


Intangible assets, net

2,102,389



2,333,296


Other assets

580,788



533,252


Total assets

$

23,965,615



$

20,244,638


Liabilities and Stockholders' Equity




Accounts payable and accrued expenses

$

760,718



$

756,692


Accrued property, plant and equipment

301,535



179,412


Current portion of operating lease liabilities

145,606




Current portion of finance lease liabilities

75,239



77,844


Current portion of mortgage and loans payable

77,603



73,129


Current portion of senior notes

643,224



300,999


Other current liabilities

153,938



126,995


Total current liabilities

2,157,863



1,515,071


Operating lease liabilities, less current portion

1,315,656




Finance lease liabilities, less current portion

1,430,882



1,441,077


Mortgage and loans payable, less current portion

1,289,434



1,310,663


Senior notes, less current portion

8,309,673



8,128,785


Other liabilities

621,725



629,763


Total liabilities

15,125,233



13,025,359


Common stock

86



81


Additional paid-in capital

12,696,433



10,751,313


Treasury stock

(144,256)



(145,161)


Accumulated dividends

(4,168,469)



(3,331,200)


Accumulated other comprehensive loss

(934,613)



(945,702)


Retained earnings

1,391,425



889,948


Total Equinix stockholders' equity

8,840,606



7,219,279


Non-controlling interests

(224)




Total stockholders' equity

8,840,382



7,219,279


Total liabilities and stockholders' equity

$

23,965,615



$

20,244,638










Ending headcount by geographic region is as follows:




Americas headcount

3,672



3,480


EMEA headcount

2,941



2,751


Asia-Pacific headcount

1,765



1,672


Total headcount

8,378



7,903


 

EQUINIX, INC.

Summary of Debt Principal Outstanding

(in thousands)

(unaudited)



December 31, 2019


December 31, 2018





Finance lease liabilities

$

1,506,121



$

1,518,921






Term loans

1,282,302



1,337,868


Mortgage payable and other loans payable

84,735



45,924


Plus: debt discount and issuance costs, net

3,081



4,732


Total mortgage and loans payable principal

1,370,118



1,388,524






Senior notes

8,952,897



8,429,784


Plus: debt issuance costs

78,030



75,372


Less: debt premium

(1,716)



(5,031)


Total senior notes principal

9,029,211



8,500,125






Total debt principal outstanding

$

11,905,450



$

11,407,570


 

EQUINIX, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)




Three Months Ended


Twelve Months Ended



December 31,
2019


September 30,
2019


December 31,
2018


December 31,
2019


December 31,
2018












Cash flows from operating activities:








Net income

$

124,835



$

120,811



$

110,022



$

507,245



$

365,359



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


Depreciation, amortization and accretion

328,295



321,746



305,130



1,285,296



1,226,741



Stock-based compensation

62,126



63,871



40,867



236,539



180,716



Amortization of debt issuance costs and debt discounts and premiums

3,613



3,196



3,009



13,042



13,618



(Gain) loss on debt extinguishment

52,758



(315)



12,163



52,825



51,377



Gain on asset sales

(43,847)



(463)





(44,310)



(6,013)



Impairment charges

(233)



1,189





15,790





Other items

3,831



2,820



10,704



19,620



27,644



Changes in operating assets and liabilities:








Accounts receivable

96,480



3,331



32,195



(26,909)



(52,931)



Income taxes, net

(40,649)



42,482



22,206



32,495



(10,670)



Accounts payable and accrued expenses

(34,588)



10,647



30,713



(27,928)



35,495



Operating lease right-of-use assets

40,805



29,743





149,031





Operating lease liabilities

(40,032)



(38,254)





(152,091)





Other assets and liabilities

(23,724)



(61,810)



(8,380)



(67,917)



(15,910)


Net cash provided by operating activities

529,670



498,994



558,629



1,992,728



1,815,426


Cash flows from investing activities:






Purchases, sales and maturities of investments, net

(5,776)



(2,905)



1,402



(20,523)



20,597



Business acquisitions, net of cash and restricted cash acquired





(502)



(34,143)



(829,687)



Purchases of real estate

(104,865)



(16,852)



(45,806)



(169,153)



(182,418)



Purchases of other property, plant and equipment

(714,561)



(556,822)



(680,665)



(2,079,521)



(2,096,174)



Proceeds from asset sales

358,656



117





358,773



12,154


Net cash used in investing activities

(466,546)



(576,462)



(725,571)



(1,944,567)



(3,075,528)









Cash flows from financing activities:








Proceeds from employee equity awards



24,425



33



52,018



50,136



Payment of dividend distributions

(210,360)



(212,752)



(183,858)



(836,164)



(738,600)



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



99,421



114,299



1,660,976



388,172



Proceeds from loans payable









424,650



Proceeds from senior notes, net of debt discounts

2,797,906







2,797,906



929,850



Repayment of finance lease liabilities

(63,701)



(19,673)



(14,119)



(126,486)



(103,774)



Repayment of mortgage and loans payable

(19,431)



(17,584)



(17,975)



(73,227)



(447,473)



Repayment of senior notes

(2,056,289)







(2,206,289)





Debt extinguishment costs

(43,311)







(43,311)



(20,556)



Debt issuance costs

(23,341)







(23,341)



(12,218)



Other financing activities





725





725


Net cash provided by (used in) financing activities

381,473



(126,163)



(100,895)



1,202,082



470,912


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

21,883



(13,528)



(2,963)



8,766



(33,907)


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

466,480



(217,159)



(270,800)



1,259,009



(823,097)


Cash, cash equivalents and restricted cash at beginning of period

1,420,133



1,637,292



898,404



627,604



1,450,701


Cash, cash equivalents and restricted cash at end of period

$

1,886,613



$

1,420,133



$

627,604



$

1,886,613



$

627,604


Supplemental cash flow information:







Cash paid for taxes

$

47,507



$

29,383



$

15,727



$

136,583



$

93,375


Cash paid for interest

$

141,140



$

153,265



$

121,779



$

553,815



$

496,794













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

$

68,900



$

(74,563)



$

(168,344)



$

68,684



$

(1,280,699)













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

$

173,765



$

(57,711)



$

(122,036)



$

271,980



$

(268,594)
























(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

$

529,670



$

498,994



$

558,629



$

1,992,728



$

1,815,426



Net cash used in investing activities as presented above

(466,546)



(576,462)



(725,571)



(1,944,567)



(3,075,528)



Purchases, sales and maturities of investments, net

5,776



2,905



(1,402)



20,523



(20,597)



Free cash flow (negative free cash flow)

$

68,900



$

(74,563)



$

(168,344)



$

68,684



$

(1,280,699)













(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)

$

68,900



$

(74,563)



$

(168,344)



$

68,684



$

(1,280,699)



Less business acquisitions, net of cash and restricted cash acquired





502



34,143



829,687



Less purchases of real estate

104,865



16,852



45,806



169,153



182,418



Adjusted free cash flow (adjusted negative free cash flow)

$

173,765



$

(57,711)



$

(122,036)



$

271,980



$

(268,594)













 

EQUINIX, INC.

Non-GAAP Measures and Other Supplemental Data

(in thousands)

(unaudited)




Three Months Ended


Twelve Months Ended



December 31,
2019


September 30,
2019


December 31,
2018


December 31,
2019


December 31,
2018


Recurring revenues

$

1,337,977



$

1,319,336



$

1,230,318



$

5,238,186



$

4,776,502



Non-recurring revenues

79,158



77,474



79,765



323,954



295,152



Revenues (1)

1,417,135



1,396,810



1,310,083



5,562,140



5,071,654














Cash cost of revenues (2)

477,144



464,950



445,995



1,851,458



1,696,436



Cash gross profit (3)

939,991



931,860



864,088



3,710,682



3,375,218














Cash operating expenses (4)(7):










Cash sales and marketing expenses (5)

100,430



98,117



99,613



401,877



382,489



Cash general and administrative

expenses (6)

163,701



159,041



147,280



621,078



579,489



Total cash operating expenses (4)(7)

264,131



257,158



246,893



1,022,955



961,978














Adjusted EBITDA (8)

$

675,860



$

674,702



$

617,195



$

2,687,727



$

2,413,240














Cash gross margins (9)

66

%


67

%


66

%


67

%


67

%













Adjusted EBITDA

margins (10)

48

%


48

%


47

%


48

%


48

%













Adjusted EBITDA flow-through rate (11)

6

%


(20)

%


18

%


56

%


51

%













FFO (12)

$

304,025



$

331,485



$

332,810



$

1,314,556



$

1,253,120














AFFO (13) (14)

$

472,611



$

472,744



$

414,145



$

1,931,122



$

1,659,097














Basic FFO per share (15)

$

3.56



$

3.90



$

4.13



$

15.62



$

15.71














Diluted FFO per share (15)

$

3.54



$

3.87



$

4.12



$

15.52



$

15.63














Basic AFFO per share (15)

$

5.54



$

5.56



$

5.14



$

22.95



$

20.80














Diluted AFFO per share(15)

$

5.51



$

5.52



$

5.13



$

22.81



$

20.69
























(1)

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

















Americas Revenues:






















Colocation

$

443,991



$

441,596



$

438,150



$

1,769,654



$

1,732,998



Interconnection

149,474



146,212



137,031



576,709



532,163



Managed infrastructure

21,485



24,082



20,070



90,262



75,595



Other

5,020



3,392



5,350



19,743



16,570



Recurring revenues

619,970



615,282



600,601



2,456,368



2,357,326



Non-recurring revenues

33,696



29,993



37,547



131,359



127,408



Revenues

$

653,666



$

645,275



$

638,148



$

2,587,727



$

2,484,734

























EMEA Revenues:






















Colocation

$

359,423



$

357,201



$

315,118



$

1,395,544



$

1,201,769



Interconnection

44,350



41,063



35,288



161,552



138,874



Managed infrastructure

28,495



27,651



29,881



113,631



118,685



Other

3,458



1,787



1,482



10,019



8,164



Recurring revenues

435,726



427,702



381,769



1,680,746



1,467,492



Non-recurring revenues

28,063



30,438



21,315



125,698



95,145



Revenues

$

463,789



$

458,140



$

403,084



$

1,806,444



$

1,562,637














Asia-Pacific Revenues:






















Colocation

$

219,306



$

214,304



$

191,891



$

857,009



$

735,404



Interconnection

41,180



39,495



34,917



155,328



130,928



Managed infrastructure

21,795



22,553



21,140



88,735



85,352



Recurring revenues

282,281



276,352



247,948



1,101,072



951,684



Non-recurring revenues

17,399



17,043



20,903



66,897



72,599



Revenues

$

299,680



$

293,395



$

268,851



$

1,167,969



$

1,024,283














Worldwide Revenues:






















Colocation

$

1,022,720



$

1,013,101



$

945,159



$

4,022,207



$

3,670,171



Interconnection

235,004



226,770



207,236



893,589



801,965



Managed infrastructure

71,775



74,286



71,091



292,628



279,632



Other

8,478



5,179



6,832



29,762



24,734



Recurring revenues

1,337,977



1,319,336



1,230,318



5,238,186



4,776,502



Non-recurring revenues

79,158



77,474



79,765



323,954



295,152



Revenues

$

1,417,135



$

1,396,810



$

1,310,083



$

5,562,140



$

5,071,654
























(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

$

725,636



$

704,339



$

670,935



$

2,810,184



$

2,605,475



Depreciation, amortization and accretion expense

(241,753)



(232,285)



(219,799)



(933,371)



(890,792)



Stock-based compensation expense

(6,739)



(7,104)



(5,141)



(25,355)



(18,247)



Cash cost of revenues

$

477,144



$

464,950



$

445,995



$

1,851,458



$

1,696,436














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

















Americas cash cost of revenues

$

184,029



$

182,516



$

184,545



$

729,100



$

710,683



EMEA cash cost of revenues

187,972



180,370



161,781



720,890



629,853



Asia-Pacific cash cost of revenues

105,143



102,064



99,669



401,468



355,900



Cash cost of revenues

$

477,144



$

464,950



$

445,995



$

1,851,458



$

1,696,436







(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

$

406,060



$

403,386



$

367,950



$

1,586,064



$

1,460,396



Depreciation and amortization expense

(86,542)



(89,461)



(85,331)



(351,925)



(335,949)



Stock-based compensation expense

(55,387)



(56,767)



(35,726)



(211,184)



(162,469)



Cash operating expense

$

264,131



$

257,158



$

246,893



$

1,022,955



$

961,978













(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

$

160,556



$

161,574



$

161,804



$

651,046



$

633,702



Depreciation and amortization expense

(47,659)



(47,663)



(48,723)



(192,450)



(197,765)



Stock-based compensation expense

(12,467)



(15,794)



(13,468)



(56,719)



(53,448)



Cash sales and marketing expense

$

100,430



$

98,117



$

99,613



$

401,877



$

382,489













(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

$

245,504



$

241,812



$

206,146



$

935,018



$

826,694



Depreciation and amortization expense

(38,883)



(41,798)



(36,608)



(159,475)



(138,184)



Stock-based compensation expense

(42,920)



(40,973)



(22,258)



(154,465)



(109,021)



Cash general and administrative expense

$

163,701



$

159,041



$

147,280



$

621,078



$

579,489













(7)

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













Americas cash SG&A

$

155,561



$

156,103



$

151,279



$

621,005



$

590,220



EMEA cash SG&A

69,072



65,252



59,813



257,574



234,504



Asia-Pacific cash SG&A

39,498



35,803



35,801



144,376



137,254



Cash SG&A

$

264,131



$

257,158



$

246,893



$

1,022,955



$

961,978













(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

$

312,974



$

285,368



$

270,717



$

1,169,631



$

977,383



Depreciation, amortization and accretion expense

328,295



321,746



305,130



1,285,296



1,226,741



Stock-based compensation expense

62,126



63,871



40,867



236,539



180,716



Impairment charges

(233)



1,189





15,790





Transaction costs

16,545



2,991



481



24,781



34,413



Gain on asset sales

(43,847)



(463)





(44,310)



(6,013)



Adjusted EBITDA

$

675,860