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SEC Filings

10-Q
EQUINIX INC filed this Form 10-Q on 11/02/2018
Entire Document
 

primarily due to an increase in expansion activity and usage due to our business growth; (iii) $7.2 million of higher depreciation expense, primarily driven by expansion activity in Amsterdam, Frankfurt, London and Paris and (iv) $3.1 million of higher compensation costs, including general salaries, bonuses and stock-based compensation and higher headcount growth (1,288 EMEA cost of revenues employees, excluding those from the Itconic and Zenium acquisitions, as of September 30, 2018 versus 1,167 as of September 30, 2017). During the three months ended September 30, 2018, foreign currency fluctuations on our EMEA cost of revenues resulted in approximately $2.9 million of net favorable foreign currency impact to our EMEA cost of revenues primarily due to a generally stronger U.S. dollar relative to the Euro, Turkish Lira and Swedish Krona during the three months ended September 30, 2018 compared to the three months ended September 30, 2017. We expect EMEA cost of revenues to increase as we continue to grow our business.
Asia-Pacific Cost of Revenues. Cost of revenues for our Asia-Pacific region for the three months ended September 30, 2018 included approximately $11.3 million incremental cost of revenues from the Metronode Acquisition. Excluding the impact from the Metronode Acquisition, the increase in our Asia-Pacific cost of revenues for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017 was primarily due to (i) $3.6 million of higher utilities costs, primarily driven by higher usage in Japan and Singapore; (ii) $2.9 million of higher depreciation expense, primarily from IBX expansions in Japan, Australia, Singapore and Hong Kong and (iii) $2.4 million of higher office expenses and rent and facility costs due to business growth. For the three months ended September 30, 2018, the impact of foreign currency fluctuations on our Asia-Pacific cost of revenues was not significant when compared to average exchange rates of the three months ended September 30, 2017. We expect our Asia-Pacific cost of revenues to increase as we continue to grow our business, including the impact from the Metronode Acquisition.
Sales and Marketing Expenses. Our sales and marketing expenses for the three months ended September 30, 2018 and 2017 were split among the following geographic regions (dollars in thousands):
 
Three Months Ended September 30,
 
% Change
 
2018
 
%
 
2017
 
%
 
Actual
 
Constant
Currency
Americas
$
96,899

 
61
%
 
$
99,599

 
63
%
 
(3
)%
 
(2
)%
EMEA
37,594

 
24
%
 
39,359

 
25
%
 
(4
)%
 
(3
)%
Asia-Pacific
23,427

 
15
%
 
18,661

 
12
%
 
26
 %
 
27
 %
Total
$
157,920

 
100
%
 
$
157,619

 
100
%
 
 %
 
1
 %

 
Three Months Ended
September 30,
 
2018
 
2017
Sales and marketing expenses as a percentage of revenues:
 
 
 
Americas
15
%
 
17
%
EMEA
9
%
 
12
%
Asia-Pacific
9
%
 
9
%
Total
12
%
 
14
%
Americas Sales and Marketing Expenses. Our Americas sales and marketing expenses did not materially change during the three months ended September 30, 2018 compared to the three months ended September 30, 2017. For the three months ended September 30, 2018, the impact of foreign currency fluctuations on our Americas sales and marketing expenses was not significant when compared to average exchange rates of the three months ended September 30, 2017. We anticipate that we will continue to invest in Americas sales and marketing initiatives and expect our Americas sales and marketing expenses to increase as we continue to grow our business, including the impact from recent acquisitions.
EMEA Sales and Marketing Expenses. Our EMEA sales and marketing expenses did not materially change during the three months ended September 30, 2018 compared to the three months ended September 30, 2017. For the three months ended September 30, 2018, the impact of foreign currency fluctuations on our EMEA sales and marketing expenses was not significant when compared to average exchange rates of the three months ended September 30, 2017. Over the past several years, we have been investing in our EMEA sales and marketing initiatives to further increase our revenues.
Asia-Pacific Sales and Marketing Expenses. The increase in our Asia-Pacific sales and marketing expenses for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 was primarily due to $2.5 million of incremental amortization expenses from the acquired intangible assets in connection with the Metronode Acquisition. For the three

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