Equinix Reports Second Quarter 2019 Results
- Quarterly revenues increased 10% year-over-year, both on an as-reported and normalized and constant currency basis, to
$1.385 billion - Customer deployments across multiple regions increased to 73% of total recurring revenue, demonstrating the value of
Equinix's global platform - Interconnection revenue growth continues to outpace colocation revenue growth, as global ecosystems continue to scale
- The portfolio of interconnection services on Platform Equinix® expanded with the launch of Network Edge, a new service enabling customers to deploy virtual network services at
Equinix
Second Quarter 2019 Results Summary
- Revenues
$1.385 billion , a 2% increase over the previous quarter- Operating Income
$292 million , a 4% increase over the previous quarter, an operating margin of 21%- Adjusted EBITDA
$677 million , a 49% adjusted EBITDA margin, a 3% increase over the previous quarter- Includes
$3 million of integration costs - Net Income and Net Income per Share attributable to
Equinix $144 million , a 22% increase over the previous quarter$1.69 per share, a 17% increase over the previous quarter- AFFO and AFFO per Share
$498 million , a 2% increase over the previous quarter$5.87 per share- Includes
$3 million of integration costs
2019 Annual Guidance Summary
- Revenues
$5.565 - $5.595 billion , a normalized and constant currency increase of 9% over the previous year, and a$10 million increase compared to prior guidance at the mid-point- Adjusted EBITDA
$2.660 - $2.690 billion , a 48% adjusted EBITDA margin, and a$15 million increase compared to prior guidance at the mid-point- Assumes
$11 million of integration costs - AFFO and AFFO per Share
$1.910 - $1.930 billion , a normalized and constant currency increase of 13 - 14% over the previous year, and a$25 million increase compared to prior guidance at the mid-point$22.57 - 22.81 per share, a normalized and constant currency increase of 8 - 9% over the previous year, and a$0.14 increase compared to prior guidance at the mid-point, including the impact of the Q2 ATM equity program activity- Assumes
$11 million of integration costs
Quote
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Business Highlights
Equinix further extended the portfolio of interconnection offerings on Platform Equinix with the launch of Network Edge services, a new service enabling companies to deploy virtualized services such as routers, firewalls and load balancers from industry-leading vendors includingCisco ,Juniper Networks andPalo Alto Networks . Network Edge offers enterprises a new way to deploy network services and connect their digital supply chains onEquinix's global interconnection platform, without a physical data center deployment or hardware requirements. By combining Network Edge with Equinix Cloud Exchange Fabric™ (ECX Fabric™), customers can deploy virtual edge devices and interconnect them to clouds and network providers located in new global markets, extending their reach to potentially thousands of new business partners around the world.- As a part of the company's hyperscale initiative,
Equinix signed a greater than$1.0 billion initial joint venture limited liability partnership with GIC,Singapore's sovereign wealth fund, to develop and operate xScale™ data centers inAmsterdam ,Frankfurt ,London andParis , which is expected to close in Q3 2019. xScale data centers will serve the unique core workload deployment needs of a targeted group of hyperscale companies, including the world's largest cloud service providers. The facilities, on or proximate to some ofEquinix's existing International Business Exchange™ (IBX®) data center campuses, will allow these key enablers of digital transformation to streamline their continued growth, while strengtheningEquinix's leadership position in the cloud ecosystem, as enterprises increasingly embrace hybrid multicloud as the IT architecture of choice. Fitch Ratings upgraded all ofEquinix's ratings to investment grade, reflectingEquinix's leading market position in data center colocation and interconnection, geographic diversity, stable customer and revenue characteristics, and positive secular demand drivers.Equinix's lower leverage relative to its peer group, wide access to diverse sources of capital and substantial liquidity were all deemed consistent with an investment grade REIT profile. This isEquinix's second investment grade upgrade following S&P Global Ratings' upgrade to BBB- onFebruary 27, 2019 , makingEquinix's notes index-eligible to further expand its potential global investor base while also triggering the automatic covenant fall-away provisions in certain senior note indentures issued byEquinix , and also providing the company a significant opportunity to lower its net borrowing costs on both existing and new debt facilities.Equinix continued to amplify its go-to-market reach through indirect selling initiatives, with channel sales delivering more than 25% of the bookings for the quarter. Additionally, channel bookings accounted for 60% of the new logos acquired in the quarter, asEquinix deepened its engagement with high-priority partners to drive increased productivity and joint offer creation across its reseller and alliance partners.- As digital transformation is forcing companies to change how they interconnect users and clouds at the digital edge,
Equinix now serves more than half of the Fortune 500 and has its highest number ever of Fortune 500 and Global 2000 prospects in the pipeline. As a part of this, in Q2, the enterprise vertical experienced diversified growth across travel, legal and healthcare sub-segments. New wins included a global builder and operator of toll roads enabling IoT smart transportation systems, and a leading fashion brand implementing a multicloud strategy. Equinix continued strong growth with the cloud and IT vertical with record bookings in Q2. The company now has 40% of all cloud on-ramps from the top cloud service providers. Customer wins in the quarter included a Fortune 75 technology company expanding a hosted unified communication service, andServiceNow , expanding its footprint to support its growing customer base.
Business Outlook
The business outlook includes the expected impact of the EMEA hyperscale joint venture expected to close in the third quarter; including the reduction in revenue, adjusted EBITDA and AFFO due to the sale of both LD10 and PA8 to the joint venture, net of the fees earned, lease payments incurred by
For the third quarter of 2019, the Company expects revenues to range between
For the full year of 2019, total revenues are expected to range between
The U.S. dollar exchange rates used for 2019 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to
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.
Q2 2019 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, the challenges of acquiring, operating and constructing IBX data centers and developing, deploying and delivering
EQUINIX, INC. |
|||||||||||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||||||||||
(in thousands, except per share data) |
|||||||||||||||||||
(unaudited) |
|||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|||||||||||||||
Recurring revenues |
$ |
1,306,045 |
$ |
1,274,828 |
$ |
1,187,749 |
$ |
2,580,873 |
$ |
2,338,378 |
|||||||||
Non-recurring revenues |
78,932 |
88,390 |
74,194 |
167,322 |
139,442 |
||||||||||||||
Revenues |
1,384,977 |
1,363,218 |
1,261,943 |
2,748,195 |
2,477,820 |
||||||||||||||
Cost of revenues |
698,179 |
682,030 |
651,801 |
1,380,209 |
1,274,231 |
||||||||||||||
Gross profit |
686,798 |
681,188 |
610,142 |
1,367,986 |
1,203,589 |
||||||||||||||
Operating expenses: |
|||||||||||||||||||
Sales and marketing |
159,201 |
169,715 |
154,202 |
328,916 |
313,978 |
||||||||||||||
General and administrative |
232,656 |
215,046 |
210,489 |
447,702 |
413,646 |
||||||||||||||
Acquisition costs |
2,774 |
2,471 |
30,413 |
5,245 |
35,052 |
||||||||||||||
Impairment charges |
386 |
14,448 |
— |
14,834 |
— |
||||||||||||||
Total operating expenses |
395,017 |
401,680 |
395,104 |
796,697 |
762,676 |
||||||||||||||
Income from operations |
291,781 |
279,508 |
215,038 |
571,289 |
440,913 |
||||||||||||||
Interest and other income (expense): |
|||||||||||||||||||
Interest income |
7,762 |
4,202 |
3,958 |
11,964 |
8,568 |
||||||||||||||
Interest expense |
(120,547) |
(122,846) |
(134,673) |
(243,393) |
(260,950) |
||||||||||||||
Other income (expense) |
12,180 |
(166) |
8,866 |
12,014 |
5,802 |
||||||||||||||
Loss on debt extinguishment |
— |
(382) |
(19,215) |
(382) |
(40,706) |
||||||||||||||
Total interest and other, net |
(100,605) |
(119,192) |
(141,064) |
(219,797) |
(287,286) |
||||||||||||||
Income before income taxes |
191,176 |
160,316 |
73,974 |
351,492 |
153,627 |
||||||||||||||
Income tax expense |
(47,324) |
(42,569) |
(6,356) |
(89,893) |
(23,115) |
||||||||||||||
Net income |
143,852 |
117,747 |
67,618 |
261,599 |
130,512 |
||||||||||||||
Net (income) loss attributable to non-controlling interests |
(325) |
331 |
— |
6 |
— |
||||||||||||||
Net income attributable to Equinix |
$ |
143,527 |
$ |
118,078 |
$ |
67,618 |
$ |
261,605 |
$ |
130,512 |
|||||||||
Net income per share attributable to Equinix: |
|||||||||||||||||||
Basic net income per share |
$ |
1.70 |
$ |
1.44 |
$ |
0.85 |
$ |
3.15 |
$ |
1.64 |
|||||||||
Diluted net income per share |
$ |
1.69 |
$ |
1.44 |
$ |
0.85 |
$ |
3.13 |
$ |
1.64 |
|||||||||
Shares used in computing basic net income per share |
84,399 |
81,814 |
79,479 |
83,114 |
79,361 |
||||||||||||||
Shares used in computing diluted net income per share |
84,767 |
82,090 |
79,752 |
83,471 |
79,746 |
||||||||||||||
EQUINIX, INC. |
|||||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income |
|||||||||||||||||||
(in thousands) |
|||||||||||||||||||
(unaudited) |
|||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|||||||||||||||
Net income |
$ |
143,852 |
$ |
117,747 |
$ |
67,618 |
$ |
261,599 |
$ |
130,512 |
|||||||||
Other comprehensive income (loss), net of tax: |
|||||||||||||||||||
Foreign currency translation adjustment ("CTA") gain (loss) |
25,127 |
(81,719) |
(421,233) |
(56,592) |
(275,382) |
||||||||||||||
Net investment hedge CTA gain (loss) |
(37,857) |
76,850 |
226,115 |
38,993 |
153,480 |
||||||||||||||
Unrealized gain (loss) on cash flow hedges |
(3,355) |
8,224 |
35,280 |
4,869 |
31,200 |
||||||||||||||
Net actuarial gain (loss) on defined benefit plans |
(7) |
(11) |
13 |
(18) |
21 |
||||||||||||||
Total other comprehensive income (loss), net of tax |
(16,092) |
3,344 |
(159,825) |
(12,748) |
(90,681) |
||||||||||||||
Comprehensive income (loss), net of tax |
127,760 |
121,091 |
(92,207) |
248,851 |
39,831 |
||||||||||||||
Net (income) loss attributable to non-controlling interests |
(325) |
331 |
— |
6 |
— |
||||||||||||||
Other comprehensive (income) loss attributable to non-controlling interests |
14 |
(7) |
— |
7 |
— |
||||||||||||||
Comprehensive income (loss) attributable to Equinix |
$ |
127,449 |
$ |
121,415 |
$ |
(92,207) |
$ |
248,864 |
$ |
39,831 |
EQUINIX, INC. |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
June 30, 2019 |
December 31, 2018 |
||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
1,613,529 |
$ |
606,166 |
|||
Short-term investments |
17,219 |
4,540 |
|||||
Accounts receivable, net |
752,680 |
630,119 |
|||||
Other current assets |
251,451 |
274,857 |
|||||
Assets held for sale |
353,622 |
— |
|||||
Total current assets |
2,988,501 |
1,515,682 |
|||||
Property, plant and equipment, net |
10,992,740 |
11,026,020 |
|||||
Operating lease right-of-use assets |
1,468,378 |
— |
|||||
Goodwill |
4,768,880 |
4,836,388 |
|||||
Intangible assets, net |
2,204,405 |
2,333,296 |
|||||
Other assets |
463,601 |
533,252 |
|||||
Total assets |
$ |
22,886,505 |
$ |
20,244,638 |
|||
Liabilities and Stockholders' Equity |
|||||||
Accounts payable and accrued expenses |
$ |
768,670 |
$ |
756,692 |
|||
Accrued property, plant and equipment |
344,693 |
179,412 |
|||||
Current portion of operating lease liabilities |
140,733 |
— |
|||||
Current portion of finance lease liabilities |
61,094 |
77,844 |
|||||
Current portion of mortgage and loans payable |
72,795 |
73,129 |
|||||
Current portion of senior notes |
300,929 |
300,999 |
|||||
Other current liabilities |
142,461 |
126,995 |
|||||
Liabilities held for sale |
53,030 |
— |
|||||
Total current liabilities |
1,884,405 |
1,515,071 |
|||||
Operating lease liabilities, less current portion |
1,324,527 |
— |
|||||
Finance lease liabilities, less current portion |
1,140,676 |
1,441,077 |
|||||
Mortgage and loans payable, less current portion |
1,267,551 |
1,310,663 |
|||||
Senior notes, less current portion |
7,959,467 |
8,128,785 |
|||||
Other liabilities |
560,650 |
629,763 |
|||||
Total liabilities |
14,137,276 |
13,025,359 |
|||||
Common stock |
85 |
81 |
|||||
Additional paid-in capital |
12,450,614 |
10,751,313 |
|||||
Treasury stock |
(144,725) |
(145,161) |
|||||
Accumulated dividends |
(3,743,869) |
(3,331,200) |
|||||
Accumulated other comprehensive loss |
(958,443) |
(945,702) |
|||||
Retained earnings |
1,145,580 |
889,948 |
|||||
Total Equinix stockholders' equity |
8,749,242 |
7,219,279 |
|||||
Non-controlling interests |
(13) |
— |
|||||
Total stockholders' equity |
8,749,229 |
7,219,279 |
|||||
Total liabilities and stockholders' equity |
$ |
22,886,505 |
$ |
20,244,638 |
|||
Ending headcount by geographic region is as follows: |
|||||||
Americas headcount |
3,527 |
3,480 |
|||||
EMEA headcount |
2,872 |
2,751 |
|||||
Asia-Pacific headcount |
1,691 |
1,672 |
|||||
Total headcount |
8,090 |
7,903 |
EQUINIX, INC. |
|||||||
Summary of Debt Principal Outstanding |
|||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
June 30, 2019 |
December 31, 2018 |
||||||
Finance lease liabilities |
$ |
1,201,770 |
$ |
1,518,921 |
|||
Term loans |
1,296,124 |
1,337,868 |
|||||
Mortgage payable and other loans payable |
44,222 |
45,924 |
|||||
Plus: debt discount and issuance costs, net |
3,895 |
4,732 |
|||||
Total mortgage and loans payable principal |
1,344,241 |
1,388,524 |
|||||
Senior notes |
8,260,396 |
8,429,784 |
|||||
Plus: debt issuance costs |
68,936 |
75,372 |
|||||
Less: debt premium |
(3,132) |
(5,031) |
|||||
Total senior notes principal |
8,326,200 |
8,500,125 |
|||||
Total debt principal outstanding |
$ |
10,872,211 |
$ |
11,407,570 |
EQUINIX, INC. |
||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||||||||||||||
(in thousands) |
||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||
Net income |
$ |
143,852 |
$ |
117,747 |
$ |
67,618 |
$ |
261,599 |
$ |
130,512 |
||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||||||
Depreciation, amortization and accretion |
320,550 |
314,705 |
308,828 |
635,255 |
615,293 |
|||||||||||||||
Stock-based compensation |
61,519 |
49,023 |
49,725 |
110,542 |
92,261 |
|||||||||||||||
Amortization of debt issuance costs and debt discounts and premiums |
3,238 |
2,995 |
3,362 |
6,233 |
7,461 |
|||||||||||||||
Loss on debt extinguishment |
— |
382 |
19,215 |
382 |
40,706 |
|||||||||||||||
Impairment charges |
386 |
14,448 |
— |
14,834 |
— |
|||||||||||||||
Other items |
4,745 |
8,224 |
2,322 |
12,969 |
11,210 |
|||||||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||||||
Accounts receivable |
(42,370) |
(84,350) |
32,834 |
(126,720) |
(38,441) |
|||||||||||||||
Income taxes, net |
14,837 |
15,825 |
(7,485) |
30,662 |
(22,866) |
|||||||||||||||
Accounts payable and accrued expenses |
7,476 |
(11,463) |
10,818 |
(3,987) |
(24,325) |
|||||||||||||||
Operating lease right-of-use assets |
37,219 |
41,264 |
— |
78,483 |
— |
|||||||||||||||
Operating lease liabilities |
(34,919) |
(38,886) |
— |
(73,805) |
— |
|||||||||||||||
Other assets and liabilities |
26,390 |
(8,773) |
51,491 |
17,617 |
27,824 |
|||||||||||||||
Net cash provided by operating activities |
542,923 |
421,141 |
538,728 |
964,064 |
839,635 |
|||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||
Purchases, sales and maturities of investments, net |
(3,063) |
(8,779) |
13,240 |
(11,842) |
12,743 |
|||||||||||||||
Business acquisitions, net of cash and restricted cash acquired |
(34,143) |
— |
(830,993) |
(34,143) |
(830,993) |
|||||||||||||||
Purchases of real estate |
(41,715) |
(5,721) |
(27,082) |
(47,436) |
(41,782) |
|||||||||||||||
Purchases of other property, plant and equipment |
(444,171) |
(363,967) |
(520,239) |
(808,138) |
(869,968) |
|||||||||||||||
Net cash used in investing activities |
(523,092) |
(378,467) |
(1,365,074) |
(901,559) |
(1,730,000) |
|||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||
Proceeds from employee equity awards |
— |
27,593 |
13 |
27,593 |
25,860 |
|||||||||||||||
Payment of dividend distributions |
(208,449) |
(204,603) |
(181,760) |
(413,052) |
(368,759) |
|||||||||||||||
Proceeds from public offering of common stock, net of offering costs |
348,121 |
1,213,434 |
7,622 |
1,561,555 |
7,622 |
|||||||||||||||
Proceeds from senior notes |
— |
— |
— |
— |
929,850 |
|||||||||||||||
Repayment of finance lease liabilities |
(11,954) |
(31,158) |
(14,069) |
(43,112) |
(69,856) |
|||||||||||||||
Repayment of mortgage and loans payable |
(17,878) |
(18,334) |
(18,816) |
(36,212) |
(25,415) |
|||||||||||||||
Repayment of senior notes |
(150,000) |
— |
— |
(150,000) |
— |
|||||||||||||||
Debt extinguishment costs |
— |
— |
148 |
— |
(20,556) |
|||||||||||||||
Debt issuance costs |
— |
— |
— |
— |
(11,583) |
|||||||||||||||
Other financing activities |
— |
— |
580 |
— |
580 |
|||||||||||||||
Net cash provided by (used in) financing activities |
(40,160) |
986,932 |
(206,282) |
946,772 |
467,743 |
|||||||||||||||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash |
2,106 |
(1,695) |
(33,743) |
411 |
(25,840) |
|||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
(18,223) |
1,027,911 |
(1,066,371) |
1,009,688 |
(448,462) |
|||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period |
1,655,515 |
627,604 |
2,068,610 |
627,604 |
1,450,701 |
|||||||||||||||
Cash, cash equivalents and restricted cash at end of period |
$ |
1,637,292 |
$ |
1,655,515 |
$ |
1,002,239 |
$ |
1,637,292 |
$ |
1,002,239 |
||||||||||
Supplemental cash flow information: |
||||||||||||||||||||
Cash paid for taxes |
$ |
32,669 |
$ |
27,024 |
$ |
17,681 |
$ |
59,693 |
$ |
49,442 |
||||||||||
Cash paid for interest |
$ |
113,266 |
$ |
146,144 |
$ |
115,071 |
$ |
259,410 |
$ |
222,128 |
||||||||||
Free cash flow (negative free cash flow) (1) |
$ |
22,894 |
$ |
51,453 |
$ |
(839,586) |
$ |
74,347 |
$ |
(903,108) |
||||||||||
Adjusted free cash flow (adjusted negative free cash flow) (2) |
$ |
98,752 |
$ |
57,174 |
$ |
18,489 |
$ |
155,926 |
$ |
(30,333) |
||||||||||
(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 |
$ |
542,923 |
$ |
421,141 |
$ |
538,728 |
$ |
964,064 |
$ |
839,635 |
||||||||||
Net cash used in investing activities as presented above |
(523,092) |
(378,467) |
(1,365,074) |
(901,559) |
(1,730,000) |
|||||||||||||||
Purchases, sales and maturities of investments, net |
3,063 |
8,779 |
(13,240) |
11,842 |
(12,743) |
|||||||||||||||
Free cash flow (negative free cash flow) |
$ |
22,894 |
$ |
51,453 |
$ |
(839,586) |
$ |
74,347 |
$ |
(903,108) |
||||||||||
(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 |
$ |
22,894 |
$ |
51,453 |
$ |
(839,586) |
$ |
74,347 |
$ |
(903,108) |
||||||||||
Less business acquisitions, net of cash and restricted cash acquired |
34,143 |
— |
830,993 |
34,143 |
830,993 |
|||||||||||||||
Less purchases of real estate |
41,715 |
5,721 |
27,082 |
47,436 |
41,782 |
|||||||||||||||
Adjusted free cash flow (adjusted negative free cash flow) |
$ |
98,752 |
$ |
57,174 |
$ |
18,489 |
$ |
155,926 |
$ |
(30,333) |
EQUINIX, INC. |
||||||||||||||||||||
Non-GAAP Measures and Other Supplemental Data |
||||||||||||||||||||
(in thousands) |
||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||||
June 30, 2019 |
March 31, 2019 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
||||||||||||||||
Recurring revenues |
$ |
1,306,045 |
$ |
1,274,828 |
$ |
1,187,749 |
$ |
2,580,873 |
$ |
2,338,378 |
||||||||||
Non-recurring revenues |
78,932 |
88,390 |
74,194 |
167,322 |
139,442 |
|||||||||||||||
Revenues (1) |
1,384,977 |
1,363,218 |
1,261,943 |
2,748,195 |
2,477,820 |
|||||||||||||||
Cash cost of revenues (2) |
460,983 |
448,381 |
421,733 |
909,364 |
817,255 |
|||||||||||||||
Cash gross profit (3) |
923,994 |
914,837 |
840,210 |
1,838,831 |
1,660,565 |
|||||||||||||||
Cash operating expenses (4)(7): |
||||||||||||||||||||
Cash sales and marketing expenses (5) |
95,114 |
108,216 |
91,468 |
203,330 |
189,537 |
|||||||||||||||
Cash general and administrative expenses(6) |
151,870 |
146,466 |
144,738 |
298,336 |
287,509 |
|||||||||||||||
Total cash operating expenses (4) (7) |
246,984 |
254,682 |
236,206 |
501,666 |
477,046 |
|||||||||||||||
Adjusted EBITDA (8) |
$ |
677,010 |
$ |
660,155 |
$ |
604,004 |
$ |
1,337,165 |
$ |
1,183,519 |
||||||||||
Cash gross margins (9) |
67 |
% |
67 |
% |
67 |
% |
67 |
% |
67 |
% |
||||||||||
Adjusted EBITDA margins(10) |
49 |
% |
48 |
% |
48 |
% |
49 |
% |
48 |
% |
||||||||||
Adjusted EBITDA flow-through rate (11) |
77 |
% |
81 |
% |
53 |
% |
70 |
% |
55 |
% |
||||||||||
FFO (12) |
$ |
352,973 |
$ |
326,073 |
$ |
289,525 |
$ |
679,046 |
$ |
580,280 |
||||||||||
AFFO (13) (14) |
$ |
497,647 |
$ |
488,120 |
$ |
428,126 |
$ |
985,767 |
$ |
842,702 |
||||||||||
Basic FFO per share (15) |
$ |
4.18 |
$ |
3.99 |
$ |
3.64 |
$ |
8.17 |
$ |
7.31 |
||||||||||
Diluted FFO per share (15) |
$ |
4.16 |
$ |
3.97 |
$ |
3.63 |
$ |
8.14 |
$ |
7.28 |
||||||||||
Basic AFFO per share (15) |
$ |
5.90 |
$ |
5.97 |
$ |
5.39 |
$ |
11.86 |
$ |
10.62 |
||||||||||
Diluted AFFO per share(15) |
$ |
5.87 |
$ |
5.95 |
$ |
5.37 |
$ |
11.81 |
$ |
10.57 |
||||||||||
(1) |
The geographic split of our revenues on a services basis is presented below: |
|||||||||||||||||||
Americas Revenues: |
||||||||||||||||||||
Colocation |
$ |
444,086 |
$ |
439,981 |
$ |
433,895 |
$ |
884,067 |
$ |
861,020 |
||||||||||
Interconnection |
142,460 |
138,563 |
131,720 |
281,023 |
260,973 |
|||||||||||||||
Managed infrastructure |
22,908 |
21,787 |
18,292 |
44,695 |
36,827 |
|||||||||||||||
Other |
5,352 |
5,979 |
4,980 |
11,331 |
6,059 |
|||||||||||||||
Recurring revenues |
614,806 |
606,310 |
588,887 |
1,221,116 |
1,164,879 |
|||||||||||||||
Non-recurring revenues |
29,614 |
38,056 |
29,388 |
67,670 |
56,023 |
|||||||||||||||
Revenues |
$ |
644,420 |
$ |
644,366 |
$ |
618,275 |
$ |
1,288,786 |
$ |
1,220,902 |
||||||||||
EMEA Revenues: |
||||||||||||||||||||
Colocation |
$ |
347,795 |
$ |
331,125 |
$ |
293,518 |
$ |
678,920 |
$ |
581,579 |
||||||||||
Interconnection |
38,614 |
37,525 |
33,969 |
76,139 |
68,946 |
|||||||||||||||
Managed infrastructure |
28,397 |
29,088 |
29,731 |
57,485 |
60,417 |
|||||||||||||||
Other |
2,275 |
2,499 |
2,364 |
4,774 |
4,130 |
|||||||||||||||
Recurring revenues |
417,081 |
400,237 |
359,582 |
817,318 |
715,072 |
|||||||||||||||
Non-recurring revenues |
32,774 |
34,423 |
23,586 |
67,197 |
47,726 |
|||||||||||||||
Revenues |
$ |
449,855 |
$ |
434,660 |
$ |
383,168 |
$ |
884,515 |
$ |
762,798 |
||||||||||
Asia-Pacific Revenues: |
||||||||||||||||||||
Colocation |
$ |
213,734 |
$ |
209,665 |
$ |
186,172 |
$ |
423,399 |
$ |
352,370 |
||||||||||
Interconnection |
37,957 |
36,696 |
31,924 |
74,653 |
62,693 |
|||||||||||||||
Managed infrastructure |
22,467 |
21,920 |
21,184 |
44,387 |
43,364 |
|||||||||||||||
Recurring revenues |
274,158 |
268,281 |
239,280 |
542,439 |
458,427 |
|||||||||||||||
Non-recurring revenues |
16,544 |
15,911 |
21,220 |
32,455 |
35,693 |
|||||||||||||||
Revenues |
$ |
290,702 |
$ |
284,192 |
$ |
260,500 |
$ |
574,894 |
$ |
494,120 |
||||||||||
Worldwide Revenues: |
||||||||||||||||||||
Colocation |
$ |
1,005,615 |
$ |
980,771 |
$ |
913,585 |
$ |
1,986,386 |
$ |
1,794,969 |
||||||||||
Interconnection |
219,031 |
212,784 |
197,613 |
431,815 |
392,612 |
|||||||||||||||
Managed infrastructure |
73,772 |
72,795 |
69,207 |
146,567 |
140,608 |
|||||||||||||||
Other |
7,627 |
8,478 |
7,344 |
16,105 |
10,189 |
|||||||||||||||
Recurring revenues |
1,306,045 |
1,274,828 |
1,187,749 |
2,580,873 |
2,338,378 |
|||||||||||||||
Non-recurring revenues |
78,932 |
88,390 |
74,194 |
167,322 |
139,442 |
|||||||||||||||
Revenues |
$ |
1,384,977 |
$ |
1,363,218 |
$ |
1,261,943 |
$ |
2,748,195 |
$ |
2,477,820 |
||||||||||
(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 |
$ |
698,179 |
$ |
682,030 |
$ |
651,801 |
$ |
1,380,209 |
$ |
1,274,231 |
||||||||||
Depreciation, amortization and accretion expense |
(230,696) |
(228,637) |
(225,461) |
(459,333) |
(448,470) |
|||||||||||||||
Stock-based compensation expense |
(6,500) |
(5,012) |
(4,607) |
(11,512) |
(8,506) |
|||||||||||||||
Cash cost of revenues |
$ |
460,983 |
$ |
448,381 |
$ |
421,733 |
$ |
909,364 |
$ |
817,255 |
||||||||||
The geographic split of our cash cost of revenues is presented below: |
||||||||||||||||||||
Americas cash cost of revenues |
$ |
182,920 |
$ |
179,635 |
$ |
180,057 |
$ |
362,555 |
$ |
344,312 |
||||||||||
EMEA cash cost of revenues |
179,347 |
173,201 |
155,085 |
352,548 |
307,899 |
|||||||||||||||
Asia-Pacific cash cost of revenues |
98,716 |
95,545 |
86,591 |
194,261 |
165,044 |
|||||||||||||||
Cash cost of revenues |
$ |
460,983 |
$ |
448,381 |
$ |
421,733 |
$ |
909,364 |
$ |
817,255 |
||||||||||
(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 |
$ |
391,857 |
$ |
384,761 |
$ |
364,691 |
$ |
776,618 |
$ |
727,624 |
||||||||||
Depreciation and amortization expense |
(89,854) |
(86,068) |
(83,367) |
(175,922) |
(166,823) |
|||||||||||||||
Stock-based compensation expense |
(55,019) |
(44,011) |
(45,118) |
(99,030) |
(83,755) |
|||||||||||||||
Cash operating expense |
$ |
246,984 |
$ |
254,682 |
$ |
236,206 |
$ |
501,666 |
$ |
477,046 |
||||||||||
(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 |
$ |
159,201 |
$ |
169,715 |
$ |
154,202 |
$ |
328,916 |
$ |
313,978 |
||||||||||
Depreciation and amortization expense |
(48,930) |
(48,198) |
(48,626) |
(97,128) |
(98,627) |
|||||||||||||||
Stock-based compensation expense |
(15,157) |
(13,301) |
(14,108) |
(28,458) |
(25,814) |
|||||||||||||||
Cash sales and marketing expense |
$ |
95,114 |
$ |
108,216 |
$ |
91,468 |
$ |
203,330 |
$ |
189,537 |
||||||||||
(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 |
$ |
232,656 |
$ |
215,046 |
$ |
210,489 |
$ |
447,702 |
$ |
413,646 |
||||||||||
Depreciation and amortization expense |
(40,924) |
(37,870) |
(34,741) |
(78,794) |
(68,196) |
|||||||||||||||
Stock-based compensation expense |
(39,862) |
(30,710) |
(31,010) |
(70,572) |
(57,941) |
|||||||||||||||
Cash general and administrative expense |
$ |
151,870 |
$ |
146,466 |
$ |
144,738 |
$ |
298,336 |
$ |
287,509 |
||||||||||
(7) |
The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below: |
|||||||||||||||||||
Americas cash SG&A |
$ |
152,448 |
$ |
156,893 |
$ |
144,263 |
$ |
309,341 |
$ |
291,086 |
||||||||||
EMEA cash SG&A |
60,863 |
62,387 |
57,268 |
123,250 |
117,906 |
|||||||||||||||
Asia-Pacific cash SG&A |
33,673 |
35,402 |
34,675 |
69,075 |
68,054 |
|||||||||||||||
Cash SG&A |
$ |
246,984 |
$ |
254,682 |
$ |
236,206 |
$ |
501,666 |
$ |
477,046 |
||||||||||
(8) |
We define adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition costs and gain or loss on asset sales as presented below: |
|||||||||||||||||||
Income from operations |
$ |
291,781 |
$ |
279,508 |
$ |
215,038 |
$ |
571,289 |
$ |
440,913 |
||||||||||
Depreciation, amortization and accretion expense |
320,550 |
314,705 |
308,828 |
635,255 |
615,293 |
|||||||||||||||
Stock-based compensation expense |
61,519 |
49,023 |
49,725 |
110,542 |
92,261 |
|||||||||||||||
Impairment charges |
386 |
14,448 |
— |
14,834 |
— |
|||||||||||||||
Acquisition costs |
2,774 |
2,471 |
30,413 |
5,245 |
35,052 |
|||||||||||||||
Adjusted EBITDA |
$ |
677,010 |
$ |
660,155 |
$ |
604,004 |
$ |
1,337,165 |
$ |
1,183,519 |
||||||||||