Equinix Reports First Quarter 2020 Results
- Quarterly revenues increased 6% over the same quarter last year to
$1.445 billion , or 7% on a normalized and constant currency basis, representing the 69th consecutive quarter of revenue growth - Key customer expansions included
Hurricane Electric , TikTok and Zoom - Customer deployments across multiple metros comprised 87% of total recurring revenues, demonstrating the value of the
Equinix global platform - Interconnection revenues in the quarter increased 14% over the same quarter last year, or 15% on a normalized and constant currency basis, a sustainable and steady increase over the past few quarters
- Peak Equinix Internet Exchange™ traffic increased 44% over the same quarter last year, or over 20% compared to the prior quarter, reflecting the impact of the sudden global shift to remote and work-from-home practices
First Quarter 2020 Results Summary
- Revenues
$1.445 billion , a 2% increase over the previous quarter- Includes
$15 million of negative foreign currency impact when compared to prior guidance rates - Operating Income
$253 million , a 19% decrease from the previous quarter, largely due to the sale of certain assets in Q4 to the EMEA xScale™ joint venture, and an operating margin of 18%- Adjusted EBITDA
$684 million , a 47% adjusted EBITDA margin, including higher seasonal costs- Includes
$7 million of negative foreign currency impact when compared to prior guidance rates - Includes
$3 million of integration costs - Net Income and Net Income per Share attributable to
Equinix $119 million , a 5% decrease from the previous quarter$1.38 per share, a 5% decrease from the previous quarter- AFFO and AFFO per Share
$535 million , a 13% increase over the previous quarter$6.21 per share, a 13% increase over the previous quarter- Includes
$3 million of integration costs
2020 Annual Guidance Summary
- Revenues
$5.877 -$5.985 billion , a 6 - 8% increase over the previous year, or a normalized and constant currency increase of 7 - 9%- Includes a negative foreign currency impact of
$105 million when compared to the prior guidance FX rates due to a strongU.S. dollar compared to our more significant other operating currencies, including the Euro, Pound and Brazilian Real - Adjusted EBITDA
$2.765 -$2.845 billion , a 47% adjusted EBITDA margin- Includes a negative foreign currency impact of
$48 million when compared to the prior guidance FX rates - Assumes
$20 million of integration costs - AFFO and AFFO per Share
$2.043 -$2.133 billion , an increase of 6 - 10% over the previous year, or a normalized and constant currency increase of 11 - 16%$23.62 -$24.66 per share, an increase of 4 - 8% over the previous year, or a normalized and constant currency increase of 8 - 12%- Includes a negative foreign currency impact of
$35 million when compared to the prior guidance FX rates - Assumes
$20 million of integration costs
Equinix Quote
"These are unprecedented times and our hearts go out to those who have been impacted by COVID-19. We extend our gratitude to all the front-line workers who are helping to keep us safe and healthy during this global pandemic. The
Business Highlights
- Interconnection revenues in Q1 grew 14% year-over-year, or 15% on a normalized and constant currency basis, steadily rising over the last few quarters, reflecting the demand across our portfolio of interconnection products. Today,
Equinix has the most comprehensive global interconnection platform, comprising over 370,000 physical and virtual interconnections. In Q1,Equinix added an incremental 6,800 interconnections, fueled by content video streaming and unified communication services. Equinix Cloud Exchange Fabric™ (ECX Fabric™) demonstrated strong growth in average revenue per user, as higher bandwidth and inter-metro connections become a larger share of the total. Equinix continues the growth of its indirect selling initiatives, as the company pursues high-value strategic channel partnerships. In Q1, channel activity accounted for approximately 30% of bookings, including wins across a wide range of industry segments with projects focused on digital transformation efforts, as well as COVID-19 responses.Equinix delivered strong bookings in the quarter, the second-best Q1 bookings performance in the company's history, reflecting diverse customer demand and robust interconnection growth. The network vertical achieved its third-highest bookings, with strong network reseller activity driving a diverse funnel of enterprise deals and internet capacity upgrades to support increased bandwidth for work-from-home employees. The content and digital media vertical also saw strong bookings with strength in video and social media.- As part of the company's hyperscale initiative, on
April 21, 2020 ,Equinix signed a greater than$1.0 billion initial joint venture in the form of a limited liability partnership with GIC,Singapore's sovereign wealth fund, to develop and operate xScale™ data centers inJapan . The three initial facilities in the joint venture—one inOsaka and two in Tokyo—will serve the unique core workload deployment needs of a targeted group of hyperscale companies, including the world's largest cloud service providers. This isEquinix's second joint venture with GIC. In 2019,Equinix and GIC announced the formation of a joint venture to develop and operate xScale data centers inEurope . - On
March 3, 2020 ,Equinix announced the completion of the$335 million acquisition of Packet. Now operating as "Packet, anEquinix company," the Packet team is contributing toEquinix's strategy to help enterprises seamlessly deploy hybrid multicloud architectures by developing new solutions that combine Packet's leading bare metal automation technology with the rich ecosystems, global reach and interconnection fabric of PlatformEquinix ®. Equinix continues to advance the company's sustainability agenda with meaningful progress across environmental, social and governance (ESG) initiatives. OnMay 5, 2020 ,Equinix launched its fifth annual sustainability report highlighting FY19 ESG metrics and progress, reinforcing the company's commitment toward 100% clean and renewable energy use, and its transparency around the impact of the company's global operations as it continues to grow a sustainable business.
COVID-19 Update
Many of our IBX® data centers have been identified as "essential businesses" or "critical infrastructure" by local governments for purposes of remaining open during the COVID-19 pandemic, and all IBX data centers remain operational at the time of filing of this press release. We have implemented precautionary measures to minimize the risk of operational impact and to protect the health and safety of our employees, customers, partners and communities. These include implementing tools such as an appointment-based system to control timing and frequency of visits while also encouraging our customers to leverage our IBX technicians via Smart Hands® in order to restrict visits and minimize the number of people and the amount of time spent in our IBX facilities. For the health and safety of our employees, we have temporarily closed all of our corporate offices and instructed our non-IBX employees across the globe to work from home.
The full potential impact of the COVID-19 pandemic on our financial condition or results of operations remains uncertain and will depend on a number of factors, including its impact on our customers, partners and vendors, and the impact and functioning of the global financial markets. Additional information pertaining to the impact of COVID-19 on
Business Outlook
The
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 2020 Results Conference Call and Replay Information
A replay of the call will be available one hour after the call through
Investor Presentation and Supplemental Financial Information
Additional Resources
About
Non-GAAP Financial Measures
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,
In addition, in presenting the non-GAAP financial measures,
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.
Investors should note that the non-GAAP financial measures used by
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, risks to our business and operating results related to the COVID-19 pandemic; the challenges of acquiring, operating and constructing IBX data centers and developing, deploying and delivering
|
|||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||
(in thousands, except per share data) |
|||||||||||
(unaudited) |
|||||||||||
Three Months Ended |
|||||||||||
|
|
|
|||||||||
Recurring revenues |
$ |
1,361,694 |
$ |
1,337,977 |
$ |
1,274,828 |
|||||
Non-recurring revenues |
82,848 |
79,158 |
88,390 |
||||||||
Revenues |
1,444,542 |
1,417,135 |
1,363,218 |
||||||||
Cost of revenues |
736,282 |
725,636 |
682,030 |
||||||||
Gross profit |
708,260 |
691,499 |
681,188 |
||||||||
Operating expenses: |
|||||||||||
Sales and marketing |
180,450 |
160,556 |
169,715 |
||||||||
General and administrative |
261,597 |
245,504 |
215,046 |
||||||||
Transaction costs |
11,530 |
16,545 |
2,471 |
||||||||
Impairment charges |
— |
(233) |
14,448 |
||||||||
(Gain) loss on asset sales |
1,199 |
(43,847) |
— |
||||||||
Total operating expenses |
454,776 |
378,525 |
401,680 |
||||||||
Income from operations |
253,484 |
312,974 |
279,508 |
||||||||
Interest and other income (expense): |
|||||||||||
Interest income |
4,273 |
7,532 |
4,202 |
||||||||
Interest expense |
(107,338) |
(117,617) |
(122,846) |
||||||||
Other income (expense) |
5,170 |
12,336 |
(166) |
||||||||
Loss on debt extinguishment |
(6,441) |
(52,758) |
(382) |
||||||||
Total interest and other, net |
(104,336) |
(150,507) |
(119,192) |
||||||||
Income before income taxes |
149,148 |
162,467 |
160,316 |
||||||||
Income tax expense |
(30,191) |
(37,632) |
(42,569) |
||||||||
Net income |
118,957 |
124,835 |
117,747 |
||||||||
Net (income) loss attributable to non-controlling interests |
(165) |
160 |
331 |
||||||||
Net income attributable to |
$ |
118,792 |
$ |
124,995 |
$ |
118,078 |
|||||
Net income per share attributable to |
|||||||||||
Basic net income per share |
$ |
1.39 |
$ |
1.47 |
$ |
1.44 |
|||||
Diluted net income per share |
$ |
1.38 |
$ |
1.46 |
$ |
1.44 |
|||||
Shares used in computing basic net income per share |
85,551 |
85,289 |
81,814 |
||||||||
Shares used in computing diluted net income per share |
86,144 |
85,831 |
82,090 |
|
|||||||||||
Condensed Consolidated Statements of Comprehensive Income |
|||||||||||
(in thousands) |
|||||||||||
(unaudited) |
|||||||||||
Three Months Ended |
|||||||||||
|
|
|
|||||||||
Net income |
$ |
118,957 |
$ |
124,835 |
$ |
117,747 |
|||||
Other comprehensive loss, net of tax: |
|||||||||||
Foreign currency translation adjustment ("CTA") gain (loss) |
(413,792) |
283,185 |
(81,719) |
||||||||
Net investment hedge CTA gain (loss) |
144,946 |
(154,596) |
76,850 |
||||||||
Unrealized gain (loss) on cash flow hedges |
(3,256) |
(22,928) |
8,224 |
||||||||
Net actuarial gain (loss) on defined benefit plans |
35 |
(22) |
(11) |
||||||||
Total other comprehensive income (loss), net of tax |
(272,067) |
105,639 |
3,344 |
||||||||
Comprehensive income (loss), net of tax |
(153,110) |
230,474 |
121,091 |
||||||||
Net (income) loss attributable to non-controlling interests |
(165) |
160 |
331 |
||||||||
Other comprehensive (income) loss attributable to non-controlling interests |
11 |
(16) |
(7) |
||||||||
Comprehensive income (loss) attributable to |
$ |
(153,264) |
$ |
230,618 |
$ |
121,415 |
|
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
|
|
||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
1,171,339 |
$ |
1,869,577 |
|||
Short-term investments |
25,833 |
10,362 |
|||||
Accounts receivable, net |
687,153 |
689,134 |
|||||
Other current assets |
435,784 |
303,543 |
|||||
Total current assets |
2,320,109 |
2,872,616 |
|||||
Property, plant and equipment, net |
12,177,044 |
12,152,597 |
|||||
Operating lease right-of-use assets |
1,414,711 |
1,475,367 |
|||||
|
4,927,459 |
4,781,858 |
|||||
Intangible assets, net |
2,108,539 |
2,102,389 |
|||||
Other assets |
642,836 |
580,788 |
|||||
Total assets |
$ |
23,590,698 |
$ |
23,965,615 |
|||
Liabilities and Stockholders' Equity |
|||||||
Accounts payable and accrued expenses |
$ |
717,574 |
$ |
760,718 |
|||
Accrued property, plant and equipment |
317,144 |
301,535 |
|||||
Current portion of operating lease liabilities |
140,596 |
145,606 |
|||||
Current portion of finance lease liabilities |
89,262 |
75,239 |
|||||
Current portion of mortgage and loans payable |
74,473 |
77,603 |
|||||
Current portion of senior notes |
300,401 |
643,224 |
|||||
Other current liabilities |
199,023 |
153,938 |
|||||
Total current liabilities |
1,838,473 |
2,157,863 |
|||||
Operating lease liabilities, less current portion |
1,261,964 |
1,315,656 |
|||||
Finance lease liabilities, less current portion |
1,489,945 |
1,430,882 |
|||||
Mortgage and loans payable, less current portion |
1,469,195 |
1,289,434 |
|||||
Senior notes, less current portion |
8,253,745 |
8,309,673 |
|||||
Other liabilities |
608,082 |
621,725 |
|||||
Total liabilities |
14,921,404 |
15,125,233 |
|||||
Common stock |
86 |
86 |
|||||
Additional paid-in capital |
12,893,455 |
12,696,433 |
|||||
|
(127,298) |
(144,256) |
|||||
Accumulated dividends |
(4,399,527) |
(4,168,469) |
|||||
Accumulated other comprehensive loss |
(1,206,669) |
(934,613) |
|||||
Retained earnings |
1,509,317 |
1,391,425 |
|||||
Total Equinix stockholders' equity |
8,669,364 |
8,840,606 |
|||||
Non-controlling interests |
(70) |
(224) |
|||||
Total stockholders' equity |
8,669,294 |
8,840,382 |
|||||
Total liabilities and stockholders' equity |
$ |
23,590,698 |
$ |
23,965,615 |
|||
Ending headcount by geographic region is as follows: |
|||||||
|
3,924 |
3,672 |
|||||
EMEA headcount |
3,044 |
2,941 |
|||||
|
1,813 |
1,765 |
|||||
Total headcount |
8,781 |
8,378 |
|
|||||||
Summary of Debt Principal Outstanding |
|||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
|
|
||||||
Finance lease liabilities |
$ |
1,579,207 |
$ |
1,506,121 |
|||
Term loans |
1,214,717 |
1,282,302 |
|||||
Revolving credit facility |
250,000 |
— |
|||||
Mortgage payable and other loans payable |
78,951 |
84,735 |
|||||
Plus: debt discount and issuance costs, net |
2,615 |
3,081 |
|||||
Total mortgage and loans payable principal |
1,546,283 |
1,370,118 |
|||||
Senior notes |
8,554,146 |
8,952,897 |
|||||
Plus: debt issuance costs |
73,075 |
78,030 |
|||||
Less: debt premium |
(1,121) |
(1,716) |
|||||
Total senior notes principal |
8,626,100 |
9,029,211 |
|||||
Total debt principal outstanding |
$ |
11,751,590 |
$ |
11,905,450 |
|
||||||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||||||
(in thousands) |
||||||||||||
(unaudited) |
||||||||||||
Three Months Ended |
||||||||||||
|
|
|
||||||||||
Cash flows from operating activities: |
||||||||||||
Net income |
$ |
118,957 |
$ |
124,835 |
$ |
117,747 |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation, amortization and accretion |
337,431 |
328,295 |
314,705 |
|||||||||
Stock-based compensation |
64,499 |
62,126 |
49,023 |
|||||||||
Amortization of debt issuance costs and debt discounts and premiums |
3,460 |
3,613 |
2,995 |
|||||||||
Loss on debt extinguishment |
6,441 |
52,758 |
382 |
|||||||||
(Gain) loss on asset sales |
1,199 |
(43,847) |
— |
|||||||||
Impairment charges |
— |
(233) |
14,448 |
|||||||||
Other items |
6,856 |
3,831 |
8,224 |
|||||||||
Changes in operating assets and liabilities: |
||||||||||||
Accounts receivable |
15,306 |
96,480 |
(84,350) |
|||||||||
Income taxes, net |
3,697 |
(40,649) |
15,825 |
|||||||||
Accounts payable and accrued expenses |
(25,681) |
(34,588) |
(11,463) |
|||||||||
Operating lease right-of-use assets |
38,797 |
40,805 |
41,264 |
|||||||||
Operating lease liabilities |
(35,193) |
(40,032) |
(38,886) |
|||||||||
Other assets and liabilities |
(18,939) |
(23,724) |
(8,773) |
|||||||||
Net cash provided by operating activities |
516,830 |
529,670 |
421,141 |
|||||||||
Cash flows from investing activities: |
||||||||||||
Purchases, sales and maturities of investments, net |
(38,940) |
(5,776) |
(8,779) |
|||||||||
Business acquisitions, net of cash and restricted cash acquired |
(478,287) |
— |
— |
|||||||||
Purchases of real estate |
(36,373) |
(104,865) |
(5,721) |
|||||||||
Purchases of other property, plant and equipment |
(400,941) |
(714,561) |
(363,967) |
|||||||||
Proceeds from asset sales |
— |
358,656 |
— |
|||||||||
Net cash used in investing activities |
(954,541) |
(466,546) |
(378,467) |
|||||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from employee equity awards |
30,391 |
— |
27,593 |
|||||||||
Payment of dividend distributions |
(233,479) |
(210,360) |
(204,603) |
|||||||||
Proceeds from public offering of common stock, net of offering costs |
101,792 |
— |
1,213,434 |
|||||||||
Proceeds from revolving credit facility |
250,000 |
— |
— |
|||||||||
Proceeds from senior notes, net of debt discounts |
— |
2,797,906 |
— |
|||||||||
Repayment of finance lease liabilities |
(18,977) |
(63,701) |
(31,158) |
|||||||||
Repayment of mortgage and loans payable |
(18,501) |
(19,431) |
(18,334) |
|||||||||
Repayment of senior notes |
(343,711) |
(2,056,289) |
— |
|||||||||
Debt extinguishment costs |
(4,619) |
(43,311) |
— |
|||||||||
Debt issuance costs |
— |
(23,341) |
— |
|||||||||
Net cash provided by (used in) financing activities |
(237,104) |
381,473 |
986,932 |
|||||||||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash |
(25,287) |
21,883 |
(1,695) |
|||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
(700,102) |
466,480 |
1,027,911 |
|||||||||
Cash, cash equivalents and restricted cash at beginning of period |
1,886,613 |
1,420,133 |
627,604 |
|||||||||
Cash, cash equivalents and restricted cash at end of period |
$ |
1,186,511 |
$ |
1,886,613 |
$ |
1,655,515 |
||||||
Supplemental cash flow information: |
||||||||||||
Cash paid for taxes |
$ |
45,324 |
$ |
47,507 |
$ |
27,024 |
||||||
Cash paid for interest |
$ |
125,924 |
$ |
141,140 |
$ |
146,144 |
||||||
Free cash flow (negative free cash flow) (1) |
$ |
(398,771) |
$ |
68,900 |
$ |
51,453 |
||||||
Adjusted free cash flow (2) |
$ |
115,889 |
$ |
173,765 |
$ |
57,174 |
||||||
(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 |
$ |
516,830 |
$ |
529,670 |
$ |
421,141 |
||||||
Net cash used in investing activities as presented above |
(954,541) |
(466,546) |
(378,467) |
|||||||||
Purchases, sales and maturities of investments, net |
38,940 |
5,776 |
8,779 |
|||||||||
Free cash flow (negative free cash flow) |
$ |
(398,771) |
$ |
68,900 |
$ |
51,453 |
||||||
(2) |
We define adjusted 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 |
$ |
(398,771) |
$ |
68,900 |
$ |
51,453 |
||||||
Less business acquisitions, net of cash and restricted cash acquired |
478,287 |
— |
— |
|||||||||
Less purchases of real estate |
36,373 |
104,865 |
5,721 |
|||||||||
Adjusted free cash flow |
$ |
115,889 |
$ |
173,765 |
$ |
57,174 |
|
||||||||||||
Non-GAAP Measures and Other Supplemental Data |
||||||||||||
(in thousands) |
||||||||||||
(unaudited) |
||||||||||||
Three Months Ended |
||||||||||||
|
|
|
||||||||||
Recurring revenues |
$ |
1,361,694 |
$ |
1,337,977 |
$ |
1,274,828 |
||||||
Non-recurring revenues |
82,848 |
79,158 |
88,390 |
|||||||||
Revenues (1) |
1,444,542 |
1,417,135 |
1,363,218 |
|||||||||
Cash cost of revenues (2) |
476,541 |
477,144 |
448,381 |
|||||||||
Cash gross profit (3) |
968,001 |
939,991 |
914,837 |
|||||||||
Cash operating expenses (4)(7): |
||||||||||||
Cash sales and marketing expenses (5) |
115,671 |
100,430 |
108,216 |
|||||||||
Cash general and administrative expenses (6) |
168,120 |
163,701 |
146,466 |
|||||||||
Total cash operating expenses (4)(7) |
283,791 |
264,131 |
254,682 |
|||||||||
Adjusted EBITDA (8) |
$ |
684,210 |
$ |
675,860 |
$ |
660,155 |
||||||
Cash gross margins (9) |
67 |
% |
66 |
% |
67 |
% |
||||||
Adjusted EBITDA margins (10) |
47 |
% |
48 |
% |
48 |
% |
||||||
Adjusted EBITDA flow-through rate (11) |
30 |
% |
6 |
% |
81 |
% |
||||||
FFO (12) |
$ |
343,754 |
$ |
304,025 |
$ |
326,073 |
||||||
AFFO (13)(14) |
$ |
534,705 |
$ |
472,611 |
$ |
488,120 |
||||||
Basic FFO per share (15) |
$ |
4.02 |
$ |
3.56 |
$ |
3.99 |
||||||
Diluted FFO per share (15) |
$ |
3.99 |
$ |
3.54 |
$ |
3.97 |
||||||
Basic AFFO per share (15) |
$ |
6.25 |
$ |
5.54 |
$ |
5.97 |
||||||
Diluted AFFO per share (15) |
$ |
6.21 |
$ |
5.51 |
$ |
5.95 |
||||||
(1) |
The geographic split of our revenues on a services basis is presented below: |
|||||||||||
Americas Revenues: |
||||||||||||
Colocation |
$ |
450,954 |
$ |
443,991 |
$ |
439,981 |
||||||
Interconnection |
150,929 |
149,474 |
138,563 |
|||||||||
Managed infrastructure |
25,529 |
21,485 |
21,787 |
|||||||||
Other |
5,220 |
5,020 |
5,979 |
|||||||||
Recurring revenues |
632,632 |
619,970 |
606,310 |
|||||||||
Non-recurring revenues |
29,273 |
33,696 |
38,056 |
|||||||||
Revenues |
$ |
661,905 |
$ |
653,666 |
$ |
644,366 |
||||||
EMEA Revenues: |
||||||||||||
Colocation |
$ |
362,330 |
$ |
359,423 |
$ |
331,125 |
||||||
Interconnection |
48,541 |
44,350 |
37,525 |
|||||||||
Managed infrastructure |
30,137 |
28,495 |
29,088 |
|||||||||
Other |
2,466 |
3,458 |
2,499 |
|||||||||
Recurring revenues |
443,474 |
435,726 |
400,237 |
|||||||||
Non-recurring revenues |
35,435 |
28,063 |
34,423 |
|||||||||
Revenues |
$ |
478,909 |
$ |
463,789 |
$ |
434,660 |
||||||
Asia-Pacific Revenues: |
||||||||||||
Colocation |
$ |
221,093 |
$ |
219,306 |
$ |
209,665 |
||||||
Interconnection |
42,671 |
41,180 |
36,696 |
|||||||||
Managed infrastructure |
21,824 |
21,795 |
21,920 |
|||||||||
Recurring revenues |
285,588 |
282,281 |
268,281 |
|||||||||
Non-recurring revenues |
18,140 |
17,399 |
15,911 |
|||||||||
Revenues |
$ |
303,728 |
$ |
299,680 |
$ |
284,192 |
||||||
Worldwide Revenues: |
||||||||||||
Colocation |
$ |
1,034,377 |
$ |
1,022,720 |
$ |
980,771 |
||||||
Interconnection |
242,141 |
235,004 |
212,784 |
|||||||||
Managed infrastructure |
77,490 |
71,775 |
72,795 |
|||||||||
Other |
7,686 |
8,478 |
8,478 |
|||||||||
Recurring revenues |
1,361,694 |
1,337,977 |
1,274,828 |
|||||||||
Non-recurring revenues |
82,848 |
79,158 |
88,390 |
|||||||||
Revenues |
$ |
1,444,542 |
$ |
1,417,135 |
$ |
1,363,218 |
||||||
(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 |
$ |
736,282 |
$ |
725,636 |
$ |
682,030 |
||||||
Depreciation, amortization and accretion expense |
(250,398) |
(241,753) |
(228,637) |
|||||||||
Stock-based compensation expense |
(9,343) |
(6,739) |
(5,012) |
|||||||||
Cash cost of revenues |
$ |
476,541 |
$ |
477,144 |
$ |
448,381 |
||||||
The geographic split of our cash cost of revenues is presented below: |
||||||||||||
|
$ |
185,233 |
$ |
184,029 |
$ |
179,635 |
||||||
EMEA cash cost of revenues |
187,248 |
187,972 |
173,201 |
|||||||||
|
104,060 |
105,143 |
95,545 |
|||||||||
Cash cost of revenues |
$ |
476,541 |
$ |
477,144 |
$ |
448,381 |
||||||
(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 |
$ |
442,047 |
$ |
406,060 |
$ |
384,761 |
||||||
Depreciation and amortization expense |
(87,033) |
(86,542) |
(86,068) |
|||||||||
Stock-based compensation expense |
(71,223) |
(55,387) |
(44,011) |
|||||||||
Cash operating expense |
$ |
283,791 |
$ |
264,131 |
$ |
254,682 |
||||||
(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 |
$ |
180,450 |
$ |
160,556 |
$ |
169,715 |
||||||
Depreciation and amortization expense |
(46,234) |
(47,659) |
(48,198) |
|||||||||
Stock-based compensation expense |
(18,545) |
(12,467) |
(13,301) |
|||||||||
Cash sales and marketing expense |
$ |
115,671 |
$ |
100,430 |
$ |
108,216 |
||||||
(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 |
$ |
261,597 |
$ |
245,504 |
$ |
215,046 |
||||||
Depreciation and amortization expense |
(40,799) |
(38,883) |
(37,870) |
|||||||||
Stock-based compensation expense |
(52,678) |
(42,920) |
(30,710) |
|||||||||
Cash general and administrative expense |
$ |
168,120 |
$ |
163,701 |
$ |
146,466 |
||||||
(7) |
The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below: |
|||||||||||
|
$ |
183,059 |
$ |
155,561 |
$ |
156,893 |
||||||
EMEA cash SG&A |
61,503 |
69,072 |
62,387 |
|||||||||
|
39,229 |
39,498 |
35,402 |
|||||||||
Cash SG&A |
$ |
283,791 |
$ |
264,131 |
$ |
254,682 |
||||||
(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 |
$ |
253,484 |
$ |
312,974 |
$ |
279,508 |
||||||
Depreciation, amortization and accretion expense |
337,431 |
328,295 |
314,705 |
|||||||||
Stock-based compensation expense |
80,566 |
62,126 |
49,023 |
|||||||||
Impairment charges |
— |
(233) |
14,448 |
|||||||||
Transaction costs |
11,530 |
16,545 |
2,471 |
|||||||||
(Gain) loss on asset sales |
1,199 |
(43,847) |
— |
|||||||||
Adjusted EBITDA |
$ |
684,210 |
$ |
675,860 |
$ |
660,155 |
||||||
The geographic split of our adjusted EBITDA is presented below: |
||||||||||||
|
$ |
47,308 |
$ |
136,236 |
$ |
90,011 |
||||||
|
171,439 |
165,580 |
167,136 |
|||||||||
|
62,689 |
44,878 |
34,171 |
|||||||||
|
— |
(233) |
14,448 |
|||||||||
|
10,978 |
13,378 |
2,072 |
|||||||||
|
1,199 |
(45,763) |
— |
|||||||||
|
$ |
293,613 |
$ |
314,076 |
$ |
307,838 |
||||||
EMEA income from operations |
$ |
126,004 |
$ |
96,453 |
$ |
105,007 |
||||||
EMEA depreciation, amortization and accretion expense |
92,740 |
95,264 |
84,547 |
|||||||||
EMEA stock-based compensation expense |
11,002 |
10,788 |
8,863 |
|||||||||
EMEA transaction costs |
412 |
2,324 |
655 |
|||||||||
EMEA loss on asset sales |
— |
1,916 |
— |
|||||||||
EMEA adjusted EBITDA |
$ |
230,158 |
$ |
206,745 |
$ |
199,072 |
||||||
|
$ |
80,172 |
$ |
80,285 |
$ |
84,490 |
||||||
|
73,252 |
67,451 |
63,022 |
|||||||||
|
6,875 |
6,460 |
5,989 |
|||||||||
|
140 |
843 |
(256) |
|||||||||
|
$ |
160,439 |
$ |
155,039 |
$ |
153,245 |
||||||
(9) |
We define cash gross margins as cash gross profit divided by revenues. |
|||||||||||
Our cash gross margins by geographic region is presented below: |
||||||||||||
|
72 |
% |
72 |
% |
72 |
% |
||||||
EMEA cash gross margins |
61 |
% |
59 |
% |
60 |
% |
||||||
|
66 |
% |
65 |
% |
66 |
% |
||||||
(10) |
We define adjusted EBITDA margins as adjusted EBITDA divided by revenues. |
|||||||||||
|
44 |
% |
48 |
% |
48 |
% |
||||||
EMEA adjusted EBITDA margins |
48 |
% |
45 |
% |
46 |
% |
||||||
|
53 |
% |
52 |
% |
54 |
% |
||||||
(11) |
We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as follows: |
|||||||||||
Adjusted EBITDA - current period |
$ |
684,210 |
$ |
675,860 |
$ |
660,155 |
||||||
Less adjusted EBITDA - prior period |
(675,860) |
(674,702) |
(617,195) |
|||||||||
Adjusted EBITDA growth |
$ |
8,350 |
$ |
1,158 |
$ |
42,960 |
||||||
Revenues - current period |
$ |
1,444,542 |
$ |
1,417,135 |
$ |
1,363,218 |
||||||
Less revenues - prior period |
(1,417,135) |
(1,396,810) |
(1,310,083) |
|||||||||
Revenue growth |
$ |
27,407 |
$ |
20,325 |
$ |
53,135 |
||||||
Adjusted EBITDA flow-through rate |
30 |
% |
6 |
% |
81 |
% |
||||||
(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 |
$ |
118,957 |
$ |
124,835 |
$ |
117,747 |
||||||
Net (income) loss attributable to non-controlling interests |
(165) |
160 |
331 |
|||||||||
Net income attributable to |
118,792 |
124,995 |
118,078 |
|||||||||
Adjustments: |
||||||||||||
Real estate depreciation |
221,787 |
221,143 |
205,649 |
|||||||||
(Gain) loss on disposition of real estate property |
2,506 |
(42,758) |
2,346 |
|||||||||
Adjustments for FFO from unconsolidated joint ventures |
669 |
645 |
— |
|||||||||
FFO attributable to common shareholders |
$ |
343,754 |
$ |
304,025 |
$ |
326,073 |
||||||
(13) |
AFFO is defined as 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, 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 |
$ |
343,754 |
$ |
304,025 |
$ |
326,073 |
||||||
Adjustments: |
||||||||||||
Installation revenue adjustment |
(3,481) |
2,751 |
1,029 |
|||||||||
Straight-line rent expense adjustment |
1,806 |
773 |
2,378 |
|||||||||
Amortization of deferred financing costs and debt discounts and premiums |
3,460 |
3,613 |
2,995 |
|||||||||
Contract cost adjustment |
(10,434) |
(11,556) |
(6,778) |
|||||||||
Stock-based compensation expense |
80,566 |
62,126 |
49,023 |
|||||||||
Non-real estate depreciation expense |
65,591 |
60,712 |
57,994 |
|||||||||
Amortization expense |
48,491 |
48,689 |
49,535 |
|||||||||
Accretion expense (adjustment) |
1,562 |
(2,249) |
1,527 |
|||||||||
Recurring capital expenditures |
(17,868) |
(80,925) |
(20,947) |
|||||||||
Loss on debt extinguishment |
6,441 |
52,758 |
382 |
|||||||||
Transaction costs |
11,530 |
16,545 |
2,471 |
|||||||||
Impairment charges |
— |
(233) |
14,448 |
|||||||||
Income tax expense adjustment |
2,833 |
13,502 |
7,990 |
|||||||||
Adjustments for AFFO from unconsolidated joint ventures |
454 |
2,080 |
— |
|||||||||
AFFO attributable to common shareholders |
$ |
534,705 |
$ |
472,611 |
$ |
488,120 |
||||||
(14) |
Following is how we reconcile from adjusted EBITDA to AFFO: |
|||||||||||
Adjusted EBITDA |
$ |
684,210 |
$ |
675,860 |
$ |
660,155 |
||||||
Adjustments: |
||||||||||||
Interest expense, net of interest income |
(103,065) |
(110,085) |
(118,644) |
|||||||||
Amortization of deferred financing costs and debt discounts and premiums |
3,460 |
3,613 |
2,995 |
|||||||||
Income tax expense |
(30,191) |
(37,632) |
(42,569) |
|||||||||
Income tax expense adjustment |
2,833 |
13,502 |
7,990 |
|||||||||
Straight-line rent expense adjustment |
1,806 |
773 |
2,378 |
|||||||||
Contract cost adjustment |
(10,434) |
(11,556) |
(6,778) |
|||||||||
Installation revenue adjustment |
(3,481) |
2,751 |
1,029 |
|||||||||
Recurring capital expenditures |
(17,868) |
(80,925) |
(20,947) |
|||||||||
Other income (expense) |
5,170 |
12,336 |
(166) |
|||||||||
(Gain) loss on disposition of real estate property |
2,506 |
(42,758) |
2,346 |
|||||||||
Adjustments for unconsolidated JVs' and non-controlling interests |
958 |
2,885 |
331 |
|||||||||
Adjustment for gain (loss) on asset sales |
(1,199) |
43,847 |
— |
|||||||||
AFFO attributable to common shareholders |
$ |
534,705 |
$ |
472,611 |
$ |
488,120 |
||||||
(15) |
The shares used in the computation of basic and diluted FFO and AFFO per share attributable to |
|||||||||||
Shares used in computing basic net income per share, FFO per share and AFFO per share |
85,551 |
85,289 |
81,814 |
|||||||||
Effect of dilutive securities: |
||||||||||||
Employee equity awards |
593 |
542 |
276 |
|||||||||
Shares used in computing diluted net income per share, FFO per share and AFFO per share |
86,144 |
85,831 |
82,090 |
|||||||||
Basic FFO per share |
$ |
4.02 |
$ |
3.56 |
$ |
3.99 |
||||||
Diluted FFO per share |
$ |
3.99 |
$ |
3.54 |
$ |
3.97 |
||||||
Basic AFFO per share |
$ |
6.25 |
$ |
5.54 |
$ |
5.97 |
||||||
Diluted AFFO per share |
$ |
6.21 |
$ |
5.51 |
$ |
5.95 |
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SOURCE
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: Michelle Lindeman, Equinix, Inc., (650) 598-6361, mlindeman@equinix.com