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SEC Filings

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

hedge gains. During the nine months ended September 30, 2018, foreign currency fluctuations on our EMEA cost of revenues resulted in approximately $37.5 million of net unfavorable foreign currency impact to our EMEA cost of revenues primarily due to a generally weaker U.S. dollar relative to the Euro and British Pound during the nine months ended September 30, 2018 compared to the nine 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 nine months ended September 30, 2018 included approximately $20.2 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 nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 was primarily due to (i) $20.3 million of higher utilities costs, rent and facility costs and repairs and maintenance expense, primarily driven by higher usage in Japan, Australia, Singapore and Hong Kong; (ii) $14.4 million of higher depreciation expense, primarily from IBX expansions in Japan, Australia, Singapore and Hong Kong; (iii) $7.9 million of higher other cost of sales, primarily due to custom service orders, and (iv) $3.0 million of higher compensation costs, including general salaries, bonuses and stock-based compensation and higher headcount growth (879 Asia-Pacific cost of revenues employees as of September 30, 2018 versus 818 as of September 30, 2017). During the nine months ended September 30, 2018, foreign currency fluctuations resulted in approximately $5.3 million of net unfavorable foreign currency impact to our Asia-Pacific cost of revenues primarily due to a generally weaker U.S. dollar relative to the Japanese Yen and Singapore Dollar during the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. We expect 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 nine months ended September 30, 2018 and 2017 were split among the following geographic regions (dollars in thousands):
 
Nine Months Ended September 30,
 
% Change
 
2018
 
%
 
2017
 
%
 
Actual
 
Constant
Currency
Americas
$
291,416

 
62
%
 
$
251,988

 
59
%
 
16
 %
 
16
 %
EMEA
114,201

 
24
%
 
117,307

 
27
%
 
(3
)%
 
(8
)%
Asia-Pacific
66,281

 
14
%
 
58,817

 
14
%
 
13
 %
 
11
 %
Total
$
471,898

 
100
%
 
$
428,112

 
100
%
 
10
 %
 
9
 %

 
Nine Months Ended September 30,
 
2018
 
2017
Sales and marketing expenses as a percentage of revenues:
 
 
 
Americas
16
%
 
16
%
EMEA
10
%
 
12
%
Asia-Pacific
9
%
 
9
%
Total
13
%
 
14
%
Americas Sales and Marketing Expenses. The increase in our Americas sales and marketing expenses for the nine months ended September 30, 2018 was primarily due to (i) $38.1 million of amortization from the acquired intangible assets in connection with the Verizon Data Center Acquisition and (ii) $1.0 million of higher compensation costs, including sales compensation, general salaries and stock-based compensation and headcount growth. For the nine 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 nine 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 continue to increase as we continue to grow our business, including the impact from recent acquisitions.
EMEA Sales and Marketing Expenses. The decrease in our EMEA sales and marketing expenses for the nine months ended September 30, 2018 was primarily due to (i) $5.4 million of lower bad debt expense; (ii) $4.4 million decrease due to realized cash flow hedge gains and (iii) $2.4 million lower outside service consulting expense, partially offset by (i) $6.6 million of amortization from the acquired intangible assets, primarily due to Itconic, and (ii) $1.1 million of higher compensation costs, including sales compensation, general salaries and stock-based compensation and headcount growth. For the nine months ended September 30, 2018, foreign currency fluctuations on our EMEA sales and marketing expenses resulted in approximately $6.0 million of net unfavorable foreign currency impact to our EMEA sales and marketing expenses primarily due to a generally weaker U.S. dollar relative to the Euro and British Pound during the nine months ended September 30, 2018 compared to the nine months

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