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Equinix, Inc. Reports Record Third Quarter Results

MOUNTAIN VIEW, Calif., Oct. 17 /PRNewswire/ -- Equinix, Inc. (Nasdaq: EQIX), creator and operator of neutral Internet Business Exchange(TM) (IBX(TM)) centers, today reported revenues of $3.9 million for the third quarter ending September 30, 2000. Revenues for the third quarter grew 341% as compared to $892,000 million recorded for the previous quarter ended June 30, 2000. EBITDA (earnings before net interest expense, income taxes, depreciation and amortization of capital assets, amortization of deferred stock-based compensation and other non-cash charges) losses for the quarter were $16.7 million as compared to $15.7 million recorded in the prior quarter ended June 30, 2000. Two additional Equinix IBX centers turned EBITDA positive during the third quarter, bringing the total number EBITDA positive to three. Pro forma net loss per share was $0.50 based on 63.6 million weighted average shares outstanding, as the Company continued its fully funded expansion plan of opening eight IBX centers by the end of 2001.

"The third quarter was exceptional for Equinix. We have exceeded expectations for every key metric in our business and expanded our leadership role in providing disaggregated hosting solutions. Over the past quarter, our relentless focus on execution has led to significant achievements in revenue growth, customer wins and in the expansion of our IBX centers and value added services," said Peter Van Camp, CEO of Equinix. "The marketplace is recognizing the exceptional benefits created by our model of choice and we have seen over a 340% increase in revenues. We have opened our fifth IBX center and expanded our value proposition by offering two important new programs, IBXflex and Partners@Equinix," Van Camp concluded.

During the quarter, the Company successfully completed an Initial Public Offering, raising $253 million in net proceeds. This increase in capital base, along with a committed credit facility, provides the Company with the ability to achieve its plan of opening eight centers by the end of 2001. This plan allows the Company to turn EBITDA positive. Already, three of the five current IBX centers are EBITDA positive. In total, these eight sites will comprise approximately 870,000 square feet of IBX space, and at 95% capacity, are capable of producing between $260 - $280 million in annual recurring revenues.

Key Milestones:

Customer Wins

As of September 30th 2000, the Company reported a total of 105 customers, up from 65 as of June 30, 2000 and representing an increase of over 62% quarter over quarter. Of these customers, more than 35% are contracted across multiple IBX centers. Assuming installation of all booked cabinets, Equinix's total annual contract value increased by 94% from $32 million on June 30, 2000 to $62 million as of September 30, 2000.

Equinix actively manages the mix of customers at our IBX center to ensure best in breed choices for our customers. The choice of service options for customers was increased significantly during the quarter.

  • In the network and ISP segment we added key partners such as Ameritech, Pacific Bell, SBC, Qwest, and Verizon among others. These customers join our already best in class providers including AT&T, Cable & Wireless, InterNAP, Level 3, Nextlink, UUNet and Worldcom.

  • New customers or expanded agreements in the managed service provider segment include LoudCloud, SiteSmith, NonStopNet, SevenSpace, WorldStor, StorageNetworks and Akamai. Also announced was a $90 million dollar, multi-year nationwide agreement with IBM.

  • New content and e-commerce customers include Epoch, Forbes.com, Firedrop and the National Hockey League. In addition, we have seen excellent recognition of the value of our model in the important ASP market with such customer wins as EYT (formerly Ernst and Young Technologies), Portera, Promptu, and Webcash.

IBX Openings

The Company recorded strong customer bookings during the quarter across the five open IBX centers, with 61% of the total cabinets at these centers already booked. During the third quarter, Equinix opened two new IBX centers in Dallas and Los Angeles, and significantly expanded in the Silicon Valley. The new centers add significant capacity and are in addition to our previously opened IBX centers in the greater Washington DC, New York, and Silicon Valley areas, and increase overall square footage by 176% over second quarter to a total of 323,000 square feet across five major metropolitan areas.

New Service Offerings

In the third quarter, Equinix continued to leverage its existing base of service offerings and introduced two new value added programs to strengthen a customer's ability to improve transactions within the Internet Business Exchange.

  • IBXflex - the first offering in the industry to provide the necessary infrastructure to provide customers with greater control in the monitoring and administration of their services and Internet operations. IBM is one of the first customers for IBXflex and sees the product as a strategic requirement in meeting their customer's needs within the IBX.

  • Partners@Equinix - a structured program that allows business referrals between participants in a non-exclusive manner, thus preserving the Equinix neutral model. This important new program increases distribution channels and allows Equinix to share in the service revenues generated through the open marketplace.

Financials

In August, the Company completed an Initial Public Offering adding $253 million in net proceeds to the Company. As of September 30, cash and cash equivalents, net of restricted cash of $44.1 million for the period, were $310.6 million.

Capital expenditures for the quarter were $92.1 million. Year to date capital spending totaled $286.7 million, representing the costs associated with the design, buildout, program management and mechanical equipment installation of IBX centers.

"After our first successful quarter as a public company, our ability to scale and support a high growth opportunity has become very clear," said Van Camp. "As you can see by these results, Equinix has demonstrated significant momentum in the execution of our plan and is well positioned to drive to EBITDA positive."

About Equinix

Equinix designs, builds and operates neutral IBX(TM) centers (Internet Business Exchange(TM) centers) which provide e-commerce companies, content providers and ASPs with the power to choose from a wide variety of Internet partners. These centers facilitate the growth of the Internet and serve as the core of IP network interconnection for the 21st century. Equinix IBX centers are designed from the ground up to offer content providers, ASPs, and e-commerce companies with service delivery, availability of bandwidth from multiple networks, scalable interconnection, complete neutrality and multi-level physical security. ISPs, carriers and site performance management companies have access to the services and customers they require to build and expand their businesses. Equinix customers include AT&T, Cable & Wireless, Charles Schwab & Co., Inc., Excite@Home, EYT (formerly Ernst & Young Technologies), IBM, InterNAP, Loudcloud, NorthPoint Communications, Ogilvy & Mather, StorageNetworks, Inc., and WorldCom. For more information, please visit the company's Web site at www.equinix.com.

This press release contains forward-looking statements, including statements related to the growth in Equinix's business, revenues, EBITDA, annual contract value, annual recurring revenue and bookings. Actual results may differ from expectations due to a number of factors, including: the challenges of building and operating IBX centers and developing, deploying and delivering Equinix services; competition from existing and new competitors; the risk that customers who have placed orders may not install or may delay installations; and the ability to open new IBX centers and deliver services when requested by our customers. The matters discussed in this press release also involve risk and uncertainties described from time to time in Equinix's filings with the SEC. In particular, see Equinix's quarterly reports filed with the SEC. 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 detail)

                                    Three Months Ended     Nine Months Ended
                                      September 30,          September 30,
                                    2000        1999        2000      1999

    Revenues                        $3,933        $--      $4,961       $--
    Cost of revenues (A)            12,639        660      21,262     1,008
       Gross profit (loss)         (8,706)      (660)    (16,301)   (1,008)
    Operating expenses:
     Sales and marketing             5,046      1,126      13,754     1,845
     General and administrative     16,198      4,498      38,367     7,930
       Total operating
        expenses (B)                21,244      5,624      52,121     9,775
    Loss from operations          (29,950)    (6,284)    (68,422)  (10,783)
    Interest and other
     income (expense):
      Interest and other income      4,445        238      11,977       410
      Interest and other
        expense                    (6,580)      (242)    (20,460)     (380)
       Total interest and
        other, net                 (2,135)        (4)     (8,483)        30
    Net loss                     $(32,085)   $(6,288)   $(76,905) $(10,753)
    Pro forma basic and
     diluted net loss
     per share                     $(0.50)    $(0.25)     $(1.47)   $(0.50)
    Shares used in computing
     basic and diluted net
     loss per share                 63,625     24,682      52,215    21,526
    EBITDA (C)                   $(16,729)   $(3,278)   $(41,271)  $(6,483)

(A)Cost of revenues includes depreciation and amortization of

        $2.6 million and $0 for the three-months ended September 30, 2000 and
        1999, respectively, and $4.9 million and $0 for the nine-months ended
        September 30, 2000 and 1999, respectively.

(B)Total operating expenses include depreciation and amortization of

        $652,000 and $112,000 for the three-months ended September 30, 2000
        and 1999, respectively, and $2.0 million and $248,000 for the
        nine-months ended September 30, 2000 and 1999, respectively.

(C)Earnings before net interest expense, income taxes, depreciation and

        amortization of capital assets, amortization of stock-based
        compensation and other non-cash charges.

                                  EQUINIX, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (in thousands)

                                                  September 30,

December 31,

                                                      2000          1999
                           Assets
    Current assets:
     Cash, cash equivalents and
      short-term investments                        $310,578     $222,974
     Accounts receivable, net (A)                      5,420          178
     Current portion of restricted cash
      equivalents and short-term investments          26,312       25,110
     Prepaids and other current assets                 3,946        1,597
       Total current assets                          346,256      249,859
    Property and equipment, net                      326,607       46,756
    Restricted cash equivalents and investments,
     less current portion                             17,837       13,498
    Other assets                                      10,008        9,833
       Total assets                                 $700,708     $319,946

            Liabilities and Stockholder's Equity
    Current liabilities:
     Accounts payable and accrued expenses           $10,287       $4,143
     Accrued construction costs                       61,136        9,772
     Current portion of debt facilities
      and capital lease obligations                    6,535        4,395
     Accrued interest payable                          9,364        2,167
     Other current liabilities                         2,951          205
       Total current liabilities                      90,273       20,682
    Debt facilities and capital lease
     obligations, less current portion                 9,398        8,808
    Senior notes                                     185,418      183,955
    Other liabilities                                  2,916          802
       Total liabilities                             288,005      214,247
    Redeemable convertible preferred stock                --       97,227
    Common stock                                          76           12
    Additional paid-in capital                       561,630       43,962
    Deferred stock-based compensation               (50,209)     (13,706)
    Accumulated other comprehensive income (loss)       (79)           14
    Accumulated deficit                             (98,715)     (21,810)
       Total stockholder's equity                    412,703        8,472
       Total liabilities and stockholder's equity   $700,708     $319,946

(A)Accounts receivable, net, includes billed but unearned revenues for

the month of October and deferred installation revenues. SOURCE Equinix, Inc.

CONTACT: media, Maureen O'Brien, 650-316-6043, or mobrien@equinix.com, or investors, Lori Rognstad, 650-316-6096, or lrognstad@equinix.com, both of Equinix, Inc.; or David Fonkalsrud of Stirling & Karbo, Inc., 650-340-2867, or dlfonk@aol.com/