0001628280-21-021707 | 10-Q | XBRL Viewer

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Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2021	Nov. 03, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	000-31293
Entity Registrant Name	EQUINIX, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	77-0487526
Entity Address, Address Line One	One Lagoon Drive
Entity Address, City or Town	Redwood City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94065
City Area Code	650
Local Phone Number	598-6000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		90,041,200
Entity Central Index Key	0001101239
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Stock, $0.001
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.001
Trading Symbol	EQIX
Security Exchange Name	NASDAQ
0.250% Senior Notes due 2027
Document Information [Line Items]
Title of 12(b) Security	0.250% Senior Notes due 2027
Security Exchange Name	NASDAQ
No Trading Symbol Flag	true
1.000% Senior Notes due 2033
Document Information [Line Items]
Title of 12(b) Security	1.000% Senior Notes due 2033
Security Exchange Name	NASDAQ
No Trading Symbol Flag	true

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 1,379,100	$ 1,604,869
Short-term investments	0	4,532
Accounts receivable, net of allowance of $11,581 and $10,677	792,101	676,738
Other current assets	492,832	323,016
Assets held for sale	235,330	0
Total current assets	2,899,363	2,609,155
Property, plant and equipment, net	15,307,049	14,503,084
Operating lease right-of-use assets	1,325,872	1,475,057
Goodwill	5,401,744	5,472,553
Intangible assets, net	1,994,023	2,170,945
Other assets	846,080	776,047
Total assets	27,774,131	27,006,841
Current liabilities:
Accounts payable and accrued expenses	844,056	844,862
Accrued property, plant and equipment	347,003	301,155
Current portion of operating lease liabilities	150,490	154,207
Current portion of finance lease liabilities	148,522	137,683
Current portion of mortgage and loans payable	67,571	82,289
Current portion of senior notes	0	150,186
Other current liabilities	223,494	354,368
Total current liabilities	1,781,136	2,024,750
Operating lease liabilities, less current portion	1,147,490	1,308,627
Finance lease liabilities, less current portion	1,986,266	1,784,816
Mortgage and loans payable, less current portion	560,733	1,287,254
Senior notes, less current portion	11,000,669	9,018,277
Other liabilities	729,264	948,999
Total liabilities	17,205,558	16,372,723
Commitments and contingencies (Note 11)
Equinix stockholders' equity
Common stock, $0.001 par value per share: 300,000,000 shares authorized; 90,343,931 issued and 90,041,200 outstanding in 2021 and 89,462,304 issued and 89,134,252 outstanding in 2020	90	89
Additional paid-in capital	15,488,848	15,028,357
Treasury stock, at cost; 302,731 shares in 2021 and 328,052 shares in 2020	(112,696)	(122,118)
Accumulated dividends	(5,902,937)	(5,119,274)
Accumulated other comprehensive loss	(1,041,761)	(913,368)
Retained earnings	2,137,219	1,760,302
Total Equinix stockholders' equity	10,568,763	10,633,988
Non-controlling interests	(190)	130
Total stockholders' equity	10,568,573	10,634,118
Total liabilities and stockholders' equity	$ 27,774,131	$ 27,006,841

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 11,581	$ 10,677
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common sock, shares authorized (shares)	300,000,000	300,000,000
Common stock, shares issued (shares)	90,343,931	89,462,304
Common stock, shares outstanding (shares)	90,041,200	89,134,252
Treasury stock (shares)	302,731	328,052

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Revenues	$ 1,675,176	$ 1,519,767	$ 4,929,159	$ 4,434,430
Costs and operating expenses:
Cost of revenues	885,650	767,979	2,561,987	2,243,605
Sales and marketing	182,997	172,727	551,434	531,301
General and administrative	334,625	279,350	958,086	797,837
Transaction costs	5,197	5,840	13,364	30,987
Impairment charges	0	7,306	0	7,306
Gain on asset sales	(15,414)	(1,785)	(14,149)	(928)
Total costs and operating expenses	1,393,055	1,231,417	4,070,722	3,610,108
Income from operations	282,121	288,350	858,437	824,322
Interest income	411	1,452	1,514	7,410
Interest expense	(78,943)	(99,736)	(255,855)	(315,554)
Other income (expense)	1,482	162	(44,845)	9,610
Gain (loss) on debt extinguishment	179	(93,494)	(115,339)	(101,803)
Income before income taxes	205,250	96,734	443,912	423,985
Income tax expense	(53,224)	(29,903)	(67,325)	(104,847)
Net income	152,026	66,831	376,587	319,138
Net (income) loss attributable to non-controlling interests	190	(144)	330	(355)
Net income attributable to Equinix	$ 152,216	$ 66,687	$ 376,917	$ 318,783
Earnings per share ("EPS") attributable to Equinix:
Basic EPS (in dollars per share)	$ 1.69	$ 0.75	$ 4.21	$ 3.65
Weighted-average shares for basic EPS (in shares)	89,858	88,806	89,614	87,226
Diluted EPS (in dollars per share)	$ 1.68	$ 0.74	$ 4.18	$ 3.63
Weighted-average shares for diluted EPS (in shares)	90,467	89,519	90,202	87,925

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 152,026	$ 66,831	$ 376,587	$ 319,138
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment ("CTA") gain (loss), net of tax effects of $0, $0, $0 and $0	(260,011)	299,441	(444,691)	66,935
Net investment hedge CTA gain (loss), net of tax effect of $0, $0, $0 and $0	131,080	(227,101)	264,219	(179,213)
Unrealized gain (loss) on cash flow hedges, net of tax effects of $(6,965), $8,708, $(15,304) and $7,113	28,270	(33,842)	52,048	(54,966)
Net actuarial gain on defined benefit plans, net of tax effects of $(4), $(6), $(12) and $(3)	14	22	41	77
Total other comprehensive income (loss), net of tax	(100,647)	38,520	(128,383)	(167,167)
Comprehensive income, net of tax	51,379	105,351	248,204	151,971
Net (income) loss attributable to non-controlling interests	190	(144)	330	(355)
Other comprehensive income attributable to non-controlling interests	0	(30)	(10)	(21)
Comprehensive income attributable to Equinix	$ 51,569	$ 105,177	$ 248,524	$ 151,595

Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustment (CTA) gain (loss), tax	$ 0	$ 0	$ 0	$ 0
Net investment hedge CTA gain (loss) tax effect	0	0	0	0
Unrealized gain (loss) on cash flow hedges, tax	(6,965)	8,708	(15,304)	7,113
Net actuarial gain on defined benefit plans, tax	$ (4)	$ (6)	$ (12)	$ (3)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income	$ 376,587	$ 319,138
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	1,074,761	897,075
Stock-based compensation	267,395	215,591
Amortization of intangible assets	155,428	148,075
Amortization of debt issuance costs and debt discounts and premiums	12,760	11,788
Provision for credit loss allowance	7,604	6,466
Impairment charges	0	7,306
Gain on asset sales	(14,149)	(928)
Loss on debt extinguishment	115,339	101,803
Other items	22,377	14,764
Changes in operating assets and liabilities:
Accounts receivable	(111,313)	(38,104)
Income taxes, net	(44,200)	(20,193)
Other assets	(124,573)	(127,535)
Operating lease right-of-use assets	102,728	114,611
Operating lease liabilities	(137,751)	(107,391)
Accounts payable and accrued expenses	9,968	35,846
Other liabilities	(57,860)	45,366
Net cash provided by operating activities	1,655,101	1,623,678
Cash flows from investing activities:
Purchases of investments	(77,139)	(55,993)
Sales of investments	4,057	19,681
Business acquisitions, net of cash and restricted cash acquired	(158,498)	(478,248)
Real estate acquisitions	(194,849)	(124,462)
Purchases of other property, plant and equipment	(1,934,107)	(1,448,174)
Proceeds from sale of assets, net of cash transferred	174,494	0
Net cash used in investing activities	(2,186,042)	(2,087,196)
Cash flows from financing activities:
Proceeds from employee equity awards	77,628	62,118
Payment of dividends	(783,454)	(710,177)
Proceeds from public offering of common stock, net of issuance costs	99,599	1,981,375
Proceeds from senior notes, net of debt discounts	3,878,662	2,585,736
Proceeds from mortgage and loans payable	0	750,790
Repayments of finance lease liabilities	(130,129)	(74,446)
Repayments of mortgage and loans payable	(706,426)	(808,609)
Repayment of senior notes	(1,990,650)	(2,440,761)
Debt extinguishment costs	(99,185)	(82,404)
Debt issuance costs	(25,102)	(26,266)
Net cash provided by financing activities	320,943	1,237,356
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash	(24,139)	5,637
Net increase (decrease) in cash, cash equivalents and restricted cash	(234,137)	779,475
Cash, cash equivalents and restricted cash at beginning of period	1,625,695	1,886,613
Cash, cash equivalents and restricted cash at end of period	1,391,558	2,666,088
Cash and cash equivalents	1,379,100	2,645,045
Current portion of restricted cash included in other current assets	11,567	11,375
Non-current portion of restricted cash included in other assets	891	9,668
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows	$ 1,391,558	$ 2,666,088

Basis of Presentation and Significant Accounting Policies	9 Months Ended
	Sep. 30, 2021
Accounting Policies [Abstract]
Basis of Presentation and Significant Accounting Policies	Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by Equinix, Inc. (collectively with its consolidated subsidiaries referred to as "Equinix," the "Company," "we," "our," or "us") and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. In the preparation of our condensed consolidated financial statements, we have considered potential impacts of the COVID-19 pandemic on our critical and significant accounting estimates. There was no significant impact to our condensed consolidated financial statements. We will continue to evaluate the nature and extent of the potential impacts to our business and our condensed consolidated financial statements. Our condensed consolidated balance sheet data as of December 31, 2020 has been derived from audited consolidated financial statements as of that date. Our condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission ("SEC"), but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For further information, refer to the Consolidated Financial Statements and Notes thereto included in our Form 10-K as filed with the SEC on February 19, 2021. Results for the interim periods are not necessarily indicative of results for the entire fiscal year. Consolidation The accompanying unaudited condensed consolidated financial statements include our acquisitions of two data centers in Mumbai, India from India operations of GPX Global Systems, Inc. ("GPX India") from September 1, 2021, 12 data center sites across Canada from BCE Inc. ("Bell") from October 1, 2020 and one additional data center site from November 2, 2020, Packet Host, Inc. (“Packet”) from March 2, 2020, and three data centers in Mexico acquired from Axtel S.A.B. de C.V ("Axtel") from January 8, 2020. All intercompany accounts and transactions have been eliminated in consolidation. Income Taxes We elected to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") beginning with our 2015 taxable year. As a result, we may deduct the distributions made to our stockholders from taxable income generated by our REIT and qualified REIT subsidiaries ("QRSs"). Our dividends paid deduction generally eliminates the U.S. federal taxable income of our REIT and QRSs, resulting in no U.S. federal income tax due. However, our domestic taxable REIT subsidiaries ("TRSs") are subject to U.S. corporate income taxes on any taxable income generated by them. In addition, our foreign operations are subject to local income taxes regardless of whether the foreign operations are operated as QRSs or TRSs. We accrue for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as our operating performance, tax law changes and future business acquisitions. Our effective tax rates were 15.2% and 24.7% for the nine months ended September 30, 2021 and 2020, respectively. The decrease in the effective tax rate for the nine months ended September 30, 2021 as compared to the same period in 2020 is primarily due to the favorable resolution of uncertain tax positions of approximately $70.0 million resulting from the settlement of various tax audits in the United Kingdom ("UK"), Germany, and Australia, partially offset by $10.9 million resulting from the revaluation of our deferred tax liabilities due to the UK corporate tax rate increase from 19% to 25% enacted in the current period. Of the unrecognized tax benefits being realized in the nine months ended September 30, 2021, $32.3 million is related to the uncertain tax position inherited from the Metronode acquisition closed in 2018. The uncertain tax position was covered by an indemnification agreement with the Seller. The realization of the unrecognized tax benefits resulted in an impairment of the indemnification asset for the same amount, which has been included in Other Income (Expense) on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021. Recent Accounting Pronouncements Accounting Standards Not Yet Adopted In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08 Business Combinations ("Topic 805"): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the extent of the impact of this ASU, but do not expect the adoption of this standard to have a significant impact on our condensed consolidated financial statements. In August 2020, FASB issued ASU 2020-06: Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock and modifies the disclosure requirement for the convertible instruments. Additionally, this ASU improves the consistency of EPS calculations by eliminating the use of the treasury stock method to calculate diluted EPS for convertible instruments and clarifies certain areas under the current EPS guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted at the beginning of the fiscal year after December 15, 2020. We are currently evaluating the extent of the impact of this ASU, but do not expect the adoption of this standard to have a significant impact on our condensed consolidated financial statements. Accounting Standards Adopted In December 2019, FASB issued ASU 2019-12, Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes. The ASU simplifies accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also improves consistent application of and simplifies generally accepted accounting principles ("GAAP") for other areas of Topic 740 by clarifying and amending existing guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted including adoption in any interim period for periods for which financial statements have not yet been issued. On January 1, 2021, we adopted this ASU on a prospective basis and the adoption of this standard did not have an impact on our condensed consolidated financial statements. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform ("Topic 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In addition, FASB issued ASU 2021-01, Reference Rate Reform ("Topic 848"), which clarifies the scope of Topic 848. Collectively, the guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 was effective for all entities as of March 12, 2020 through December 31, 2022 and ASU 2021-01 is effective upon issuance. We adopted these ASUs upon their respective issuances and there was no impact on our condensed consolidated financial statements as a result of adopting the guidance. We will evaluate our debt, derivative and lease contracts that may become eligible for modification relief and may apply the elections prospectively as needed.

Revenue

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue

Contract Balances

The following table summarizes the opening and closing balances of our accounts receivable, net; contract assets, current; contract assets, non-current; deferred revenue, current; and deferred revenue, non-current (in thousands):


	Accounts receivable, net (1)		Contract assets, current		Contract assets, non-current		Deferred revenue, current		Deferred revenue, non-current
Beginning balances as of January 1, 2021	$	676,738	$	13,534	$	54,050	$	101,258	$	71,242
Closing balances as of September 30, 2021	792,101		49,793		51,452		112,952		66,318
Increase (Decrease)	$	115,363	$	36,259	$	(2,598)	$	11,694	$	(4,924)

(1) The net change in our allowance for credit losses was insignificant during the nine months ended September 30, 2021.

The difference between the opening and closing balances of our accounts receivable, net, contract assets and deferred revenues primarily results from revenue growth and the timing difference between the satisfaction of our performance obligation and the customer's payment. The amount of revenue recognized during the nine months ended September 30, 2021 from the opening deferred revenue balance as of January 1, 2021 was $72.0 million.

Remaining performance obligations

As of September 30, 2021, approximately $8.5 billion of total revenues, including deferred installation revenues, are expected to be recognized in future periods. Most of our revenue contracts have an initial term varying from one to three years, and thereafter, automatically renew in one-year increments. Included in the remaining performance obligations are contracts that are either under the initial term or under one-year renewal periods. We expect to recognize approximately 70% of our remaining performance obligations as revenues over the next two years, with more revenues expected to be recognized in the first year due to the impact of contracts renewal. The remainder of the balance is generally expected to be recognized over the next three to five years. We estimate our remaining performance obligations at a point in time. Actual amounts and timing of revenue recognition may differ from these estimates due to changes in actual deployments dates, contract modifications, renewals and/or terminations.

The remaining performance obligations do not include variable consideration related to unsatisfied performance obligations such as the usage of metered power, service fees from xScaleTM data centers, which are calculated based on future events or actual costs incurred in the future, or any contracts that could be terminated without any significant penalties such as the majority of interconnection revenues. The remaining performance obligations above include revenues to be recognized in the future related to arrangements where we are considered the lessor.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Earnings Per Share

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the periods presented (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	152,026	$	66,831	$	376,587	$	319,138
Net (income) loss attributable to non-controlling interests	190		(144)		330		(355)
Net income attributable to Equinix	$	152,216	$	66,687	$	376,917	$	318,783

Weighted-average shares used to calculate basic EPS	89,858		88,806		89,614		87,226
Effect of dilutive securities:
Employee equity awards	609		713		588		699
Weighted-average shares used to calculate diluted EPS	90,467		89,519		90,202		87,925

EPS attributable to Equinix:
Basic EPS	$	1.69	$	0.75	$	4.21	$	3.65
Diluted EPS	$	1.68	$	0.74	$	4.18	$	3.63

We have excluded common stock related to employee equity awards in the diluted EPS calculation above of approximately 17,000 shares and 16,000 shares for the three months ended September 30, 2021 and 2020, respectively, and approximately 212,000 and 31,000 shares for the nine months ended September 30, 2021 and 2020, because their effect would be anti-dilutive.

Acquisitions

9 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Acquisitions

2021 Acquisitions

Acquisition of GPX India (the "GPX India Acquisition")

On September 1, 2021, we completed the acquisition of GPX India, representing two data centers in Mumbai, India, for a total purchase consideration of approximately INR12.5 billion, or $170.5 million at the exchange rate in effect on that date. The GPX India Acquisition supports our ongoing expansion to meet customer demand in the Indian market.

2020 Acquisitions

Acquisition of Bell Data Centers (the "Bell Acquisition")

On October 1, 2020, we completed the acquisition of 12 data center sites across Canada from Bell, with one additional data center in Ottawa Canada acquired on November 2, 2020, for a total combined purchase consideration of approximately C$934.3 million, or $704.0 million at the exchange rates in effect on those dates. The acquisition supports our ongoing expansion to meet customer demand in Canada.

Acquisition of Packet (the "Packet Acquisition")

On March 2, 2020, we acquired all outstanding shares and equity awards of Packet Host, Inc. (“Packet”), a leading bare metal automation platform for a total purchase consideration of approximately $290.3 million in cash. In addition, we paid $16.1 million in cash to accelerate the vesting of unvested Packet equity awards for certain Packet employees, which was recorded as stock-based compensation expense during the three months ended March 31, 2020. In connection with the acquisition, we also issued restricted stock awards with an aggregated fair value of $30.2 million and a three-year vesting period, which will be recognized as stock-based compensation costs over the

vesting period. The acquisition, combined with Equinix MetalTM, is expected to accelerate our strategy to help enterprises deploy hybrid multicloud architectures on our data center platform.

Acquisition of data centers from Axtel (the "Axtel Acquisition")

On January 8, 2020, we completed the acquisition of three data centers in Mexico from Axtel S.A.B. de C.V. (“Axtel”) for a total purchase consideration of approximately $189.0 million, including $175.0 million in cash and $14.0 million we paid to the seller for recoverable value-added taxes ("VAT") incurred prior to the acquisition, which related to a corresponding VAT receivable acquired upon acquisition. The acquisition supports our ongoing expansion to meet customer demand in our Americas region.

Purchase Price Allocation

Each of these acquisitions constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under this method, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition.

As of September 30, 2021, we had not completed the detailed valuation analysis to derive the fair value of assets acquired and liabilities assumed from the GPX India Acquisition, including property, plant and equipment, intangible assets and the related tax impacts; therefore, the purchase price allocation is based on provisional estimates and subject to continuing management analysis.

A summary of the allocation of total purchase consideration is presented as follows (in thousands):


	GPX India		Bell		Packet		Axtel
	Provisional		Final
Cash and cash equivalents	$	9,406	$	—	$	1,068	$	—
Accounts receivable	4,399		—		5,098		—
Other current assets	8,771		696		299		14,048
Property, plant and equipment	88,108		538,717		27,945		76,407
Operating lease right-of-use assets	62		14,359		1,519		1,646
Intangible assets	15,472		75,857		58,500		22,750
Goodwill	77,296		172,387		230,620		78,902
Deferred tax and other assets	20		722		138		—
Total assets acquired	203,534		802,738		325,187		193,753
Accounts payable and accrued liabilities	(1,591)		(895)		(1,275)		(238)
Other current liabilities	(478)		—		(860)		—
Operating lease liabilities	(62)		(13,340)		(1,519)		(1,586)
Finance lease liabilities	(20,565)		(80,026)		(27,945)		—
Deferred tax and other liabilities	(10,373)		(4,495)		(3,290)		(2,911)
Net assets acquired	$	170,465	$	703,982	$	290,298	$	189,018

Property, plant and equipment - The fair values of property, plant and equipment acquired from these four acquisitions were estimated by applying the cost approach, with the exception of land, which we estimated by applying the market approach. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age.

Intangible assets - The following table presents certain information on the acquired intangible assets (in thousands):


Intangible Assets	Fair Value		Estimated Useful Lives (Years)	Weighted-average Estimated Useful Lives (Years)
GPX India:
Customer relationships	$	15,472	15.0	15.0
Bell:
Customer relationships	75,857		15.0	15.0
Packet:
Trade names	1,300		3.0	3.0
Existing technology	5,100		3.0	3.0
Customer relationships	52,100		10.0	10.0
Axtel:
Customer relationships	22,750		15.0	15.0

The fair values of customer relationships acquired from these acquisitions were estimated from applying an income approach, by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue. We applied a discount rate of 11.0% for GPX India, 8.0% for Bell, 8.0% for Packet and 13.3% for Axtel, which reflects the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows, as well as the risk of the country within which the acquired business operates.

The fair value of the Packet trade name was estimated using the relief from royalty method under the income approach. We applied a relief from royalty rate of 1.0% and a discount rate of 8.0%. The fair value of existing technology was estimated under the cost approach by projecting the cost to recreate a new asset with an equivalent utility of the existing technology. The key assumptions of the cost approach include total cost, time to recreate and functional obsolescence.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after these acquisitions. Goodwill from the Bell, Packet, and Axtel acquisitions is attributable to our Americas region and goodwill from the GPX India Acquisition is attributable to the Asia-Pacific region. Goodwill from the Bell Acquisition is expected to be deductible for local tax purposes while goodwill from the GPX India, Packet and Axtel Acquisitions are not deductible for local tax purposes.

Revenues and net income and loss from operations

The operating results of the GPX India Acquisition are reported in the Asia-Pacific region following the date of acquisition. During the three and nine months ended September 30, 2021, our results of operations from the GPX India Acquisition were insignificant.

Transaction costs

During the nine months ended September 30, 2021, the transaction costs for the GPX India Acquisition were insignificant.

Assets Held for Sale

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

Assets Held for Sale

In October 2021, we entered into an agreement to form a joint venture in the form of a limited liability partnership with PGIM Real Estate ("PGIM"), to develop and operate xScaleTM data centers in Asia-Pacific (the "Asia-Pacific 2 Joint Venture"). xScale data centers are engineered to meet the technical and operational requirements and price points of core hyperscale workload deployments and also offer access to our comprehensive suite of interconnection and edge services. Upon closing, PGIM will contribute cash in exchange for an 80% partnership interest in the Asia-Pacific 2 Joint Venture. We agreed to sell the Sydney 9 ("SY9") data center site in exchange for a 20% partnership interest in the Asia-Pacific 2 Joint Venture and cash proceeds. The assets and liabilities of the SY9 data center, which are currently included within our Asia-Pacific region, were classified as held for sale as of September 30, 2021.

In June 2021, we entered into an agreement to form another joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund ("GIC"), to develop and operate additional xScale data centers in Europe and the Americas (the “EMEA 2 Joint Venture”). The assets and liabilities of the data center sites expected to be sold to the EMEA 2 Joint Venture within a year were classified as held for sale as of June 30, 2021. The transaction is structured to close in phases over the course of two years, pending regulatory approval and other closing conditions. The first phase of the transaction, comprised of data center sites located in Frankfurt, Helsinki, Madrid, Milan and Paris, closed in September 2021. Upon closing, we sold these data center sites in exchange for a total consideration of $144.0 million, which is comprised of $106.4 million of net cash proceeds, a 20% partnership interest in the EMEA 2 Joint Venture with a fair value of $30.4 million, and $7.2 million of receivables. During the three months ended September 30, 2021, we recognized an insignificant gain on the sale of the xScale data center facilities. The assets and liabilities of Warsaw 4 ("WA4") and Sao Paulo 5 ("SP5") data center sites, which are currently included within our EMEA and Americas regions respectively, were expected to be sold to the EMEA 2 Joint Venture in the next phases and remained classified as held for sale as of September 30, 2021. The sale of the SP5 data center closed in October 2021 (see Note 14 below).

Additionally, we entered negotiations to sell the Mexico 3 ("MX3") data center site in connection with the formation of a new joint venture with GIC. Given that the key terms of the sale had been substantially agreed upon as of September 30, 2021, the assets and liabilities of the MX3 data center, which are currently included within our Americas region, were classified as held for sale as of September 30, 2021.

In May 2021, we entered into an agreement to sell the Dublin 5 ("DB5") data center site to the EMEA 1 Joint Venture (as defined in note 6 below). The assets and liabilities of the DB5 data center, which were included within our EMEA region, were classified as held for sale as of June 30, 2021. In July 2021, we sold the DB5 data center in exchange for a total consideration of $77.9 million. During the three months ended September 30, 2021, we recognized a total gain of $15.8 million on the sale of the DB5 data center.

All assets and liabilities classified as held for sale are reported at the lower of their carrying amounts or fair values less costs to sell. The following table summarizes the assets and liabilities that were classified as assets and liabilities held for sale in the condensed consolidated balance sheet as of September 30, 2021 (in thousands):


	September 30, 2021

Operating lease right-of-use assets	$	10,990
Property, plant and equipment	223,318
Other assets	1,022
Total assets held for sale	$	235,330



Accrued property, plant and equipment	$	24,085
Total liabilities held for sale (1)	$	24,085

(1)Liabilities held for sale were included within other current liabilities on the condensed consolidated balance sheet.

Equity Method Investments

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

The following table summarizes our equity method investments (in thousands), which were included in other assets on the condensed consolidated balance sheets:


Investee	Ownership Percentage	September 30, 2021		December 31, 2020
EMEA 1 Joint Venture with GIC	20%	$	114,836	$	101,892
EMEA 2 Joint Venture with GIC	20%	30,386		—
Asia-Pacific 1 Joint Venture with GIC	20%	56,566		43,432
Other	Various	18,790		17,747
Total		$	220,578	$	163,071

Non - Variable Interest Entity (VIE) Joint Venture

EMEA 1 Joint Venture

In 2019, we entered into a joint venture in the form of a limited liability partnership with GIC (the "EMEA 1 Joint Venture"), to develop and operate xScale data centers in Europe. The EMEA 1 Joint Venture is not a variable interest entity ("VIE") given that both equity investors' interests have the characteristics of a controlling financial interest and it is sufficiently capitalized to sustain its operations, requiring additional funding from its partners only when expanding operations. Our share of income and losses of equity method investments from this joint venture was insignificant for the three and nine months ended September 30, 2021 and 2020 and was included in other income (expense) on the condensed consolidated statement of operations.

We committed to make future equity contributions to the EMEA 1 Joint Venture for funding its future development. As of September 30, 2021, we had future equity contribution commitments of $43.6 million.

VIE Joint Ventures

Asia-Pacific 1 and EMEA 2 Joint Ventures

In 2020, we entered into a second joint venture in the form of a limited liability partnership with GIC (the "Asia-Pacific 1 Joint Venture") to develop and operate xScale data centers in Asia-Pacific.

In 2021, we entered into another joint venture in the form of a limited liability partnership with GIC (the "EMEA 2 Joint Venture") to develop and operate additional xScale data centers in Europe and the Americas (see Note 5 above).

For both the Asia-Pacific 1 Joint Venture and the EMEA 2 Joint Venture, we provide certain management services to their operations and earn fees for the performance of such services. Both joint ventures do not have sufficient funds from operations to be self-sustaining, thus are considered VIEs. The power to direct the activities of these joint ventures that most significantly impact economic performance is shared equally between GIC and us. These activities include data center construction and operations, sales and marketing, financing, and real estate purchases or sales. Decisions about these activities require the consent of both GIC and us. We concluded that neither party is deemed to have predominant control over the Asia-Pacific 1 Joint Venture and EMEA 2 Joint Venture and neither party is considered to be the primary beneficiary. During the three and nine months ended September 30, 2021, our share of income and losses of equity method investments from these joint ventures was insignificant both individually and in aggregate, and was included in other income (expense) on the condensed consolidated statement of operations.

The following table summarizes our maximum exposure to loss related to the Asia-Pacific 1 Joint Venture and EMEA 2 Joint Venture as of September 30, 2021 (in thousands):


	Asia-Pacific 1 Joint Venture		EMEA 2 Joint Venture
Equity Investment	$	56,566	$	30,386
Outstanding Receivables	3,844		11,451
Future Equity Contribution Commitments 1	1,098		57,662
Maximum Future Payments under Debt Guarantees 2	N/A 3		30,389
Total	$	61,508	$	129,888

(1)The joint ventures' partners are required to make additional equity contributions proportionately upon certain occurrences, such as a shortfall in capital necessary to complete certain construction phases or make interest payments on their outstanding debt.

(2)In connection with our 20% equity investment in the EMEA 2 Joint Venture, we provided the lenders with our guarantees covering 20% of all payments of principal and interest due under EMEA 2 Joint Venture's credit facility agreements (see Note 11).

(3)The Asia-Pacific 1 Joint Venture’s debt is secured by the net assets of the Asia-Pacific 1 Joint Venture without recourse to its partners.

Other Related Party Transactions

We have lease arrangements and provide various services to the EMEA 1 Joint Venture, Asia-Pacific 1 Joint Venture and EMEA 2 Joint Venture (the "Joint Ventures") through multiple agreements, including sales and marketing, development management, facilities management, and asset management services. These transactions are generally considered to have been negotiated at arm's length. The following table presents the revenues and expenses from these arrangements with the Joint Ventures in our condensed consolidated statements of operations (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
Related Party	Location of Revenues (Expenses)	2021		2020		2021		2020
EMEA 1 Joint Venture	Revenues	$	11,698	$	6,061	$	30,548	$	14,609
EMEA 1 Joint Venture	Expenses (1)	(4,006)		(3,369)		(12,786)		(10,560)
Asia-Pacific 1 Joint Venture	Revenues	4,044		—		18,489		—
EMEA 2 Joint Venture	Revenues	884		—		884		—

(1)We have a sub-lease agreement with the EMEA 1 Joint Venture to sub-lease a portion of London ("LD") 10-2 data center or former LD10 data center, for a total of 15 years. Balances primarily consist of rent expenses for the LD10-2 data center.

The following table presents the assets and liabilities from related party transactions with the Joint Ventures in our condensed consolidated balance sheets (in thousands):


Related Party	Balance Sheet Line Item	September 30, 2021		December 31, 2020
EMEA 1 Joint Venture	Receivables (1)	$	35,466	$	6,459
	Contract Assets (2)	37,322		5,614
	Finance Lease Right of Use Assets (3)	120,616		127,197
	Other Liabilities and Payables (4)	18,541		17,646
	Finance Lease Right of Use Liabilities (3)	126,080		130,756
Asia- Pacific 1 Joint Venture	Receivables (1)	3,844		16,936
EMEA 2 Joint Venture	Receivables (1)	11,451		—

(1)Balances primarily consist of amounts due under commercial service agreements.

(2)A portion of the contract asset balance relates to commitments to the EMEA 1 Joint Venture to complete a residual portion of the PA9 data center sold to the EMEA 1 Joint Venture, which is reimbursable in full upon completion. The remaining balance represents contract assets recorded under our commercial service agreements.

(3)Balances pertain to the LD10-2 data center sub-lease as described above.

(4)We have an agreement to lease to the EMEA 1 Joint Venture a portion of land for the Frankfurt 9 xScale data center and a new building that is under construction on the land. As of September 30, 2021, the lease has not commenced yet. Balance primarily consists of liabilities recorded in connection with the construction of the Frankfurt 9 xScale data center. The remaining balance pertains to meter and power charge accruals under the LD 10-2 sublease.

We received contingent consideration from the sales of xScale data centers to the EMEA 1 Joint Venture, which become receivable upon completion of certain performance milestones, primarily contingent on the local regulatory approvals for certain sites. The contingent consideration are considered derivatives and are remeasured at fair value each reporting period using inputs such as probabilities of payment, discount rates, foreign currency forward rates and projected payment dates. The fair value measurements were based on significant inputs that are not observable in the market and thus represent Level 3 measurements. The contingencies were partially met during the nine months ended September 30, 2021 upon achieving the performance milestone for one of the sites. As of September 30, 2021 and December 31, 2020, the total fair value of the remaining contingent consideration was $15.2 million and $44.2 million, respectively, which was included in other current assets on the condensed consolidated balance sheets. Changes in the fair value of the contingent consideration were recorded in gain (loss) on asset sales on the condensed consolidated statement of operations.

Derivatives and Hedging Activities

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Derivatives Designated as Hedging Instruments

Net Investment Hedges. We are exposed to the impact of foreign exchange rate fluctuations on the value of investments in our foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, we have entered into various foreign currency debt obligations, which are designated as hedges against our net investments in foreign subsidiaries. As of September 30, 2021 and December 31, 2020, the total principal amounts of foreign currency debt obligations designated as net investment hedges were $1.5 billion and $1.9 billion, respectively.

We also use cross-currency interest rate swaps, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt, to hedge the currency exposure associated with our net investment in our foreign subsidiaries. As of September 30, 2021 and December 31, 2020, we had cross-currency interest rate swaps outstanding with notional amounts of $4.0 billion and $3.3 billion respectively, with maturity dates ranging through 2026.

From time to time, we use foreign currency forward contracts to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries. As of September 30, 2021 and December 31, 2020, the total notional amount of foreign currency forward contracts designated as net investment hedges were $375.7 million and $355.6 million respectively.

The effect of net investment hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Foreign currency debt		$	36,308	$	(130,774)	$	81,290	$	(116,887)
Cross-currency interest rate swaps (included component) (1)		89,494		(78,226)		207,598		(74,419)
Cross-currency interest rate swaps (excluded component) (2)		(2,527)		(16,588)		(27,944)		13,606
Foreign currency forward contracts (included component) (1)		7,858		(1,485)		3,302		(1,485)
Foreign currency forward contracts (excluded component) (3)		(53)		(28)		(27)		(28)
Total		$	131,080	$	(227,101)	$	264,219	$	(179,213)

Amount of gain or (loss) recognized in earnings:
	Location of gain or (loss)	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Cross-currency interest rate swaps (excluded component) (2)	Interest expense	$	11,863	$	6,613	$	32,478	$	17,161
Foreign currency forward contracts (excluded component) (3)	Interest expense	38		1		242		1
Total		$	11,901	$	6,614	$	32,720	$	17,162

(1)Included component represents foreign exchange spot rates.

(2)Excluded component represents cross-currency basis spread and interest rates.

(3)Excluded component represents foreign currency forward points.

Cash Flow Hedges. We hedge our foreign currency transaction exposure for forecasted revenues and expenses in our EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward and option contracts that we use to hedge this exposure are designated as cash flow hedges. As of September 30, 2021 and December 31, 2020, the total notional amounts of these foreign exchange contracts were $898.5 million and $912.9 million, respectively.

As of September 30, 2021, our foreign currency cash flow hedge instruments had maturity dates ranging from October 2021 to September 2023 and we had a net gain of $1.6 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses relating to these cash flow hedges as they mature in the next 12 months. As of December 31, 2020, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2021 to December 2022 and we had a net loss of $35.4 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses relating to these cash flow hedges as they mature in the next 12 months.

We enter into intercompany hedging instruments ("intercompany derivatives") with our wholly-owned subsidiaries in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, we enter into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives.

We hedge the interest rate exposure created by anticipated fixed rate debt issuances through the use of treasury locks and swap locks (collectively, interest rate locks), which are designated as cash flow hedges. As of September 30, 2021, the total notional amount of interest rate locks outstanding was $350.0 million. As of December 31, 2020, we had no interest rate locks outstanding. During the nine months ended September 30, 2021, interest rate locks with a combined aggregate notional amount of $1.3 billion were settled related to the issuance of senior notes during the year. When interest rate locks are settled, any gain or loss from the transactions is deferred and included as a component of other comprehensive income (loss) and is amortized to interest expense over the term of the forecasted hedged transaction which is equivalent to the term of the interest rate locks. As of September 30, 2021 and December 31, 2020, we had a net loss of $4.2 million and $4.1 million, respectively, recorded within accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks.

The effect of cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Foreign currency forward and option contracts (included component) (1)		$	27,860	$	(40,770)	$	61,067	$	(35,092)
Foreign currency option contracts (excluded component) (2)		—		639		151		2,315
Interest rate locks		7,374		(2,420)		6,135		(29,302)
Total		$	35,234	$	(42,551)	$	67,353	$	(62,079)

Amount of gain or (loss) reclassified from accumulated other comprehensive income to income:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2021		2020		2021		2020
Foreign currency forward contracts	Revenues	$	(11,863)	$	2,904	$	(41,397)	$	44,681
Foreign currency forward contracts	Costs and operating expenses	5,872		(1,951)		21,659		(23,449)
Interest rate locks	Interest Expense	(1,101)		(731)		(2,955)		(473)
Total		$	(7,092)	$	222	$	(22,693)	$	20,759

Amount of gain or (loss) excluded from effectiveness testing included in income:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2021		2020		2021		2020

Foreign currency option contracts (excluded component) (2)	Revenues	$	—	$	(430)	$	(244)	$	(1,454)
Total		$	—	$	(430)	$	(244)	$	(1,454)

(1)Included component represents foreign exchange spot rates.

(2)Excluded component represents option's time value.

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. We are deemed to have foreign currency forward contracts embedded in certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved. These embedded derivatives are separated from their host contracts and carried on our balance sheet at their fair value. The majority of these embedded derivatives arise as a result of our foreign subsidiaries pricing their customer contracts in U.S. Dollars.

Economic Hedges of Embedded Derivatives. We use foreign currency forward contracts to manage the foreign exchange risk associated with our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved ("economic hedges of embedded derivatives"). Foreign currency forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date.

Foreign Currency Forward Contracts. We also use foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of our foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts. As of both September 30, 2021 and December 31, 2020, the total notional amounts of these foreign currency contracts was $3.4 billion.

The following table presents the effect of derivatives not designated as hedging instruments in our condensed consolidated statements of operations (in thousands):


Amount of gain or (loss) recognized in earnings:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2021		2020		2021		2020
Embedded derivatives	Revenues	$	1,023	$	(3,308)	$	6,168	$	1,402
Economic hedge of embedded derivatives	Revenues	(1,532)		3,259		(6,024)		(2,342)
Foreign currency forward contracts	Other income (expense)	62,840		(50,022)		127,615		(29,214)
Total		$	62,331	$	(50,071)	$	127,759	$	(30,154)

Fair Value of Derivative Instruments

The following table presents the fair value of derivative instruments recognized in our condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020 (in thousands):


	September 30, 2021				December 31, 2020
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Designated as hedging instruments:
Cash flow hedges
Foreign currency forward and option contracts	$	19,026	$	10,471	$	351	$	52,804
Interest rate locks	6,273		—		—		—
Net investment hedges
Cross-currency interest rate swaps	31,855		45,140		—		192,939
Foreign currency forward contracts	742		—		—		17,041
Total designated as hedging	57,896		55,611		351		262,784

Not designated as hedging instruments:
Embedded derivatives	6,339		991		3,255		3,858
Economic hedges of embedded derivatives	—		1,999		4,372		12
Foreign currency forward contracts	95,360		17,179		3,721		133,805
Total not designated as hedging	101,699		20,169		11,348		137,675
Total Derivatives	$	159,595	$	75,780	$	11,699	$	400,459

(1)As presented in our condensed consolidated balance sheets within other current assets and other assets.

(2)As presented in our condensed consolidated balance sheets within other current liabilities and other liabilities.

Offsetting Derivative Assets and Liabilities

We enter into master netting agreements with our counterparties for transactions other than embedded derivatives to mitigate credit risk exposure to any single counterparty. Master netting agreements allow for individual derivative contracts with a single counterparty to offset in the event of default. For presentation on the condensed consolidated balance sheets, we do not offset fair value amounts recognized for derivative instruments or the accrued interest related to cross-currency interest rate swaps under master netting arrangements. The following table presents information related to these offsetting arrangements as of September 30, 2021 and December 31, 2020 (in thousands):


	Gross Amounts Offset in Consolidated Balance Sheet
	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Net Amounts		Gross Amounts not Offset in the Balance Sheet		Net
September 30, 2021
Derivative assets	$	190,938	$	—	$	190,938	$	(88,534)	$	102,404
Derivative liabilities	93,401		—		93,401		(88,534)		4,867

December 31, 2020
Derivative assets	$	38,447	$	—	$	38,447	$	(35,100)	$	3,347
Derivative liabilities	415,628		—		415,628		(35,100)		380,528

Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

We perform fair value measurements in accordance with ASC 820, Fair Value Measurement, which establishes three levels of inputs that we use to measure fair value:

•Level 1: quoted prices in active markets for identical assets or liabilities.

•Level 2: observable inputs (e.g. spot rates and other data from the third-party pricing vendors for our derivative instruments) other than quoted market prices included within Level 1 that are observable, either directly or indirectly, for the assets or liabilities.

•Level 3: unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

Our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 were as follows (in thousands):


	As of September 30, 2021						As of December 31, 2020
	Fair Value		Fair Value Measurement Using				Fair Value		Fair Value Measurement Using
			Level 1		Level 2				Level 1		Level 2
Assets:
Money market and deposit accounts	$	390,997	$	390,997	$	—	$	611,071	$	611,071	$	—
Publicly traded equity securities	—		—		—		159		159		—
Certificates of deposit	—		—		—		4,373		—		4,373
Derivative instruments (1)	159,595		—		159,595		11,699		—		11,699
Total	$	550,592	$	390,997	$	159,595	$	627,302	$	611,230	$	16,072
Liabilities:
Derivative instruments (1)	$	75,780	$	—	$	75,780	$	400,459	$	—	$	400,459

(1)Amounts are included within other current assets, other assets, others current liabilities and other liabilities in the condensed consolidated balance sheets.

We did not have any nonfinancial assets or liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020.

Other than the contingent consideration related to the EMEA 1 Joint Venture as described in Note 6 above, we did not have any Level 3 financial assets or financial liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

Significant Lease Transactions

The following table summarizes the significant lease transactions during the nine months ended September 30, 2021 (in thousands):

Renewal/Termination Options Excluded (1)

Net Incremental (2)

Lease

Quarter

Transaction

Lease Classification

ROU assets

ROU liabilities

Silicon Valley 8 ("SV8") data center lease extended (3)

Extended lease term by 16 years

Two 10-year renewal options

Finance Lease

98,141

100,043

Operating Lease

(13,685)

(15,586)

Hong Kong 3 ("HK3") data center lease extended (3)

Extended lease by 10 years, which included a 5-year renewal option

N/A

Finance Lease - Building

37,987

Operating Lease - Land

6,592

Osaka 3 ("OS3") new data center and office lease

New lease-15 year term

2-year renewal option on a rolling basis

Finance Lease

144,122

(1) These renewal/termination options are not included in determining the lease terms as we are not reasonably certain to exercise them at this time.

(2) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered.

(3) These leases had components previously classified as operating leases.

Lease Expenses

The components of lease expenses are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Finance lease cost
Amortization of ROU assets (1)	$	41,983	$	31,900	$	115,221	$	85,962
Interest on lease liabilities	28,672		28,443		88,688		84,706
Total finance lease cost	70,655		60,343		203,909		170,668

Operating lease cost	54,340		55,135		167,839		161,482
Variable lease cost	8,323		3,363		23,993		8,829
Total lease cost	$	133,318	$	118,841	$	395,741	$	340,979

(1) Amortization of ROU assets is included with depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations.

Other Information

Other information related to leases is as follows (in thousands):


	Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	85,141		$	81,827
Operating cash flows from operating leases	202,861			154,262
Financing cash flows from finance leases	130,129			74,446

ROU assets obtained in exchange for lease obligations: (1)
Finance leases	$	374,529		$	357,137
Operating leases	9,359			65,906

	As of September 30, 2021			As of December 31, 2020
Weighted-average remaining lease term - finance leases (2)	14 years			14 years
Weighted-average remaining lease term - operating leases (2)	12 years			12 years
Weighted-average discount rate - finance leases	7		%	7		%
Weighted-average discount rate - operating leases	4		%	4		%
Finance lease assets (3)	$	1,889,573		$	1,688,032

(1) Represents all non-cash changes in ROU assets.

(2) Includes lease renewal options that are reasonably certain to be exercised.

(3) As of September 30, 2021 and December 31, 2020, we recorded accumulated amortization of finance lease assets of $689.2 million and $604.1 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the condensed consolidated balance sheets.

Maturities of Lease Liabilities

Maturities of lease liabilities as of September 30, 2021 are as follows (in thousands):


	Operating Leases		Finance Leases		Total
2021 (3 months remaining)	$	41,573	$	66,721	$	108,294
2022	196,671		236,967		433,638
2023	181,865		235,093		416,958
2024	166,317		233,592		399,909
2025	156,285		230,231		386,516
Thereafter	995,474		2,177,517		3,172,991
Total lease payments	1,738,185		3,180,121		4,918,306
Plus amount representing residual property value	—		16,037		16,037
Less imputed interest	(440,205)		(1,061,370)		(1,501,575)


Total	$	1,297,980	$	2,134,788	$	3,432,768

We entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of September 30, 2021. These leases will commence between year 2021 and 2023, with lease terms of 8 to 30 years and total lease commitments of approximately $387.1 million.

Leases

Significant Lease Transactions

The following table summarizes the significant lease transactions during the nine months ended September 30, 2021 (in thousands):

Renewal/Termination Options Excluded (1)

Net Incremental (2)

Lease

Quarter

Transaction

Lease Classification

ROU assets

ROU liabilities

Silicon Valley 8 ("SV8") data center lease extended (3)

Extended lease term by 16 years

Two 10-year renewal options

Finance Lease

98,141

100,043

Operating Lease

(13,685)

(15,586)

Hong Kong 3 ("HK3") data center lease extended (3)

Extended lease by 10 years, which included a 5-year renewal option

N/A

Finance Lease - Building

37,987

Operating Lease - Land

6,592

Osaka 3 ("OS3") new data center and office lease

New lease-15 year term

2-year renewal option on a rolling basis

Finance Lease

144,122

(1) These renewal/termination options are not included in determining the lease terms as we are not reasonably certain to exercise them at this time.

(2) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered.

(3) These leases had components previously classified as operating leases.

Lease Expenses

The components of lease expenses are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Finance lease cost
Amortization of ROU assets (1)	$	41,983	$	31,900	$	115,221	$	85,962
Interest on lease liabilities	28,672		28,443		88,688		84,706
Total finance lease cost	70,655		60,343		203,909		170,668

Operating lease cost	54,340		55,135		167,839		161,482
Variable lease cost	8,323		3,363		23,993		8,829
Total lease cost	$	133,318	$	118,841	$	395,741	$	340,979

Other Information

Other information related to leases is as follows (in thousands):


	Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	85,141		$	81,827
Operating cash flows from operating leases	202,861			154,262
Financing cash flows from finance leases	130,129			74,446

ROU assets obtained in exchange for lease obligations: (1)
Finance leases	$	374,529		$	357,137
Operating leases	9,359			65,906

	As of September 30, 2021			As of December 31, 2020
Weighted-average remaining lease term - finance leases (2)	14 years			14 years
Weighted-average remaining lease term - operating leases (2)	12 years			12 years
Weighted-average discount rate - finance leases	7		%	7		%
Weighted-average discount rate - operating leases	4		%	4		%
Finance lease assets (3)	$	1,889,573		$	1,688,032

(1) Represents all non-cash changes in ROU assets.

(2) Includes lease renewal options that are reasonably certain to be exercised.

Maturities of Lease Liabilities

Maturities of lease liabilities as of September 30, 2021 are as follows (in thousands):


	Operating Leases		Finance Leases		Total
2021 (3 months remaining)	$	41,573	$	66,721	$	108,294
2022	196,671		236,967		433,638
2023	181,865		235,093		416,958
2024	166,317		233,592		399,909
2025	156,285		230,231		386,516
Thereafter	995,474		2,177,517		3,172,991
Total lease payments	1,738,185		3,180,121		4,918,306
Plus amount representing residual property value	—		16,037		16,037
Less imputed interest	(440,205)		(1,061,370)		(1,501,575)


Total	$	1,297,980	$	2,134,788	$	3,432,768

Debt Facilities	9 Months Ended
Debt Facilities	Sep. 30, 2021
Debt Disclosure [Abstract]