Currencies

Equinix Reports First-Quarter 2023 Results


REDWOOD CITY, Calif., May 3, 2023 /PRNewswire/ —

  • Quarterly revenues increased 15% over the same quarter last year to $2.0 billion, or 16% on a normalized and constant currency basis
  • Closed approximately 4,000 deals across more than 3,000 customers
  • Customer deployments across multiple regions increased to 76% of total recurring revenue, an increase of 1% quarter over quarter, demonstrating the value of the Equinix global platform

Equinix, Inc. (Nasdaq: EQIX), the world’s digital infrastructure company™, today reported results for the quarter ended March 31, 2023. Equinix uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements. All per share results are presented on a fully diluted basis.

First-Quarter 2023 Results Summary

  • Revenues
    • Approximately $2.0 billion, a record quarter-over-quarter step up of $127 million or a 7% increase over the previous quarter
    • Includes approximately $90 million from power price increases and a $2 million foreign currency benefit when compared to prior guidance rates
  • Operating Income
    • $384 million, a 36% increase over the previous quarter, due to strong operating performance and flat quarter-over-quarter SG&A spend and an operating margin of 19%
  • Net Income and Net Income per Share attributable to Equinix
    • $259 million, a 101% increase over the previous quarter, primarily due to higher income from operations and lower net interest expense
    • $2.77 per share, a 99% increase over the previous quarter
  • Adjusted EBITDA
    • $944 million, a 13% increase over the previous quarter, and an adjusted EBITDA margin of 47%
    • Includes a $2 million foreign currency benefit when compared to prior guidance rates
    • Includes $5 million of integration costs
  • AFFO and AFFO per Share
    • $802 million, a 22% increase over the previous quarter, primarily due to strong operating performance and seasonally lower recurring capital expenditures
    • $8.59 per share, a 21% increase over the previous quarter
    • Includes $5 million of integration costs

2023 Annual Guidance Summary

  • Revenues
    • $8.175$8.275 billion, an increase of 13 – 14% over the previous year, or a normalized and constant currency increase of 14 – 15%
    • An increase of $30 million compared to prior guidance at the mid-point
  • Adjusted EBITDA
    • $3.635$3.715 billion, a 45% adjusted EBITDA margin
    • An increase of $20 million compared to prior guidance at the mid-point
    • Assumes $33 million of integration costs
  • AFFO and AFFO per Share
    • $2.927$3.007 billion, an increase of 8 – 11% over the previous year, or a normalized and constant currency increase of 10 – 13%
    • An increase of $44 million compared to prior guidance at the mid-point
    • $31.15$32.00 per share, an increase of 5 – 8% over the previous year, or a normalized and constant currency increase of 8 – 11%
    • Assumes $33 million of integration costs

Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income (loss) from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant.

Equinix Quote

Charles Meyers, President and CEO, Equinix:

“We had a strong start to the year, delivering nearly $2 billion of revenue for the quarter, as our outlook remains positive with the overall demand for digital transformation fueling our conviction around the long-term secular drivers of our business. We look forward to our upcoming analyst day next month, where we plan to continue the discussion of the significant opportunity ahead and our strongly differentiated position in capturing this opportunity as we enable our customers to access all the right places, partners and possibilities.”

Business Highlights

  • Equinix further invested in the expansion of its global platform which encompasses 248 data centers across 71 metros in 32 countries, including 50 major builds underway in 37 markets. Specific initiatives included:
    • In February, Equinix announced plans to build its second International Business Exchange™ (IBX®) data center in Barcelona. The new site will serve as a strategic connection point for data communications between Africa, Europe and the Middle East, as Barcelona grows as a vital hub for regional subsea cables.
    • In April, Equinix invested $50 million toward a new state-of-the-art IBX data center expected to open in Montreal in the second half of 2023. 
    • Equinix continues to expand its Data Center Services portfolio with four openings in Frankfurt, Paris, Singapore and Sydney, and four newly approved projects in Frankfurt, Lagos, Melbourne and Rio de Janeiro. The company has 10 xScale® projects underway that are expected to deliver more than 90 megawatts of capacity once opened.
  • Equinix continues to make progress in advancing its sustainability commitments:
    • As noted in the company’s recently published Annual Sustainability Report, Equinix achieved 96% renewable energy coverage of its operational load for 2022, marking the fifth consecutive year with over 90% renewable energy coverage. This reflects a 10% year-over-year increase in procurement of renewable energy on a GWh basis. Equinix also advanced its science-based targets including a 23% reduction in operational emissions across Scope 1 and Scope 2 from its 2019 baseline.
    • Year to date, Equinix has significantly increased its commitment to renewable power projects by signing a number of new long-term Power Purchase Agreements (PPAs) in Spain totaling 345 megawatts (MW). Once operational, the projects are expected to generate sufficient power to match the consumption and more at Equinix’s IBX data centers in Barcelona and Madrid. The new projects, along with existing projects, will bring Equinix’s contracted PPA capacity to 715 MW globally.
  • As global data volumes continue to accelerate, Equinix surpassed a new milestone of 30 terabits per second (TB/s) of peak traffic across its global Internet Exchanges—a 50% increase in approximately 18 months. 
  • Equinix continues to extend its leadership as the home of the interconnected cloud with five cloud on-ramp wins in Q1 bringing Equinix’s portfolio to 210 on-ramps across 46 markets. More than half of the metros in which Equinix operates now offer two or more on-ramps to the largest cloud players.
  • In January, Equinix appointed Thomas Olinger to its Board of Directors. Olinger, who previously served as the Chief Financial Officer at Prologis for the past 15 years, is a member of the Equinix Board’s Audit, Finance and Real Estate Committees. Equinix thanks Bud Lyons for his exceptional service and contributions to the growth and success of the company over the past 15 years as he retires from the Board.

Business Outlook

For the second quarter of 2023, the Company expects revenues to range between $1.995 and $2.025 billion, an increase of approximately 0 – 1% over the previous quarter, or a normalized and constant currency increase of 0 – 2%. This guidance includes a negative $10 million foreign currency impact when compared to the average FX rates in Q1 2023 and lower non-recurring revenues. Adjusted EBITDA is expected to range between $881 and $911 million. Adjusted EBITDA reflects the impact of increased seasonal energy costs and the expected expiration of prior power cost commitments, and a negative $5 million foreign currency impact when compared to the average FX rates in Q1 2023. For the quarter, integration costs from acquisitions are expected to be $5 million. Recurring capital expenditures are expected to range between $35 and $45 million.

For the full year of 2023, total revenues are expected to range between $8.175 and $8.275 billion, a 13 – 14% increase over the previous year, or a normalized and constant currency increase of 14 – 15%. This $30 million increase from previously issued guidance is due to a foreign currency benefit when compared to the prior guidance rates. Adjusted EBITDA is expected to range between $3.635 and $3.715 billion, an adjusted EBITDA margin of 45%. This $20 million increase from previously issued guidance is primarily due to a $13 million foreign currency benefit when compared to prior guidance rates, $5 million of better-than-expected operating performance and a $2 million reduction of integration costs. AFFO is expected to range between $2.927 and $3.007 billion, an increase of 8 – 11% over the previous year, or a normalized and constant currency increase of 10 – 13%. This $44 million increase from previously issued guidance is due to $32 million of better-than-expected business performance, a $2 million reduction of integration costs and a $10 million foreign currency benefit when compared to prior guidance rates. AFFO per share is expected to range between $31.15 and $32.00, an increase of 5 – 8% over the previous year, or a normalized and constant currency increase of 8 – 11%. Total capital expenditures are expected to range between $2.708 and $2.958 billion. Non-recurring capital expenditures, including xScale-related capital expenditures, are expected to range between $2.510 and $2.740 billion, and recurring capital expenditures are expected to range between $198 and $218 million. xScale-related on-balance sheet capital expenditures are expected to range between $131 and $181 million, which we anticipate will be reimbursed to Equinix from both the current and future xScale JVs.

The U.S. dollar exchange rates used for 2023 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.09 to the Euro, $1.19 to the Pound, S$1.33 to the U.S. Dollar, ¥133 to the U.S. Dollar, A$1.50 to the U.S. Dollar, HK$7.85 to the U.S. Dollar, R$5.08 to the U.S. Dollar and C$1.35 to the U.S. Dollar. The Q1 2023 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen, Australian Dollar, Hong Kong Dollar, Brazilian Real and Canadian Dollar is 20%, 9%, 8%, 5%, 4%, 3%, 3% and 2%, respectively.

The adjusted EBITDA guidance is based on the revenue guidance less our expectations of cash cost of revenues and cash operating expenses. The AFFO guidance is based on the adjusted EBITDA guidance less our expectations of net interest expense, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, income tax expense, an income tax expense adjustment, recurring capital expenditures, other income (expense), (gains) losses on disposition of real estate property, and adjustments for unconsolidated joint ventures’ and non-controlling interests’ share of these items.

Q1 2023 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended March 31, 2023, along with its future outlook, in its quarterly conference call on Wednesday, May 3, 2023, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live webcast of the call will be available on the company’s Investor Relations website at www.equinix.com/investors. To hear the conference call live, please dial 1-517-308-9482 (domestic and international) and reference the passcode EQIX.

A replay of the call will be available one hour after the call through Wednesday, August 2, 2023, by dialing 1-888-293-8912 and referencing the passcode 2023. In addition, the webcast will be available at www.equinix.com/investors (no password required).

Investor Presentation and Supplemental Financial Information

Equinix has made available on its website a presentation designed to accompany the discussion of Equinix’s results and future outlook, along with certain supplemental financial information and other data. Interested parties may access this information through the Equinix Investor Relations website at www.equinix.com/investors.

Additional Resources

About Equinix

Equinix (Nasdaq: EQIX) is the world’s digital infrastructure company, enabling digital leaders to harness a trusted platform to bring together and interconnect the foundational infrastructure that powers their success. Equinix enables today’s businesses to access all the right places, partners and possibilities they need to accelerate advantage. With Equinix, they can scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value.

Non-GAAP Financial Measures

Equinix provides all information required in accordance with generally accepted accounting principles (“GAAP”), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Equinix uses non-GAAP financial measures to evaluate its operations.

Equinix provides normalized and constant currency growth rates, which are calculated to adjust for acquisitions, dispositions, integration costs, changes in accounting principles and foreign currency.

Equinix presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents net income excluding income tax expense, interest income, interest expense, other income or expense, gain or loss on debt extinguishment, depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales.

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, Equinix excludes certain items that it believes are not good indicators of Equinix’s current or future operating performance. These items are depreciation, amortization, accretion of asset retirement obligations and accrued restructuring charges, stock-based compensation, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales. Equinix excludes these items in order for its lenders, investors and the industry analysts who review and report on Equinix to better evaluate Equinix’s operating performance and cash spending levels relative to its industry sector and competitors.

Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of a data center, and do not reflect its current or future cash spending levels to support its business. Its data centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of a data center do not recur with respect to such data center, although Equinix may incur initial construction costs in future periods with respect to additional data centers, and future capital expenditures remain minor relative to the initial investment. This is a trend it expects to continue. In addition, depreciation is also based on the estimated useful lives of the data centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our data centers and are not indicative of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations.

In addition, in presenting the non-GAAP financial measures, Equinix also excludes amortization expense related to acquired intangible assets. Amortization expense is significantly affected by the timing and magnitude of acquisitions, and these charges may vary in amount from period to period. We exclude amortization expense to facilitate a more meaningful evaluation of our current operating performance and comparisons to our prior periods. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charges, as these expenses represent costs which Equinix also believes are not meaningful in evaluating Equinix’s current operations. Equinix excludes stock-based compensation expense, as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, Equinix and many investors and analysts exclude stock-based compensation expense to compare its operating results with those of other companies. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to Equinix’s decision to exit leases for excess space adjacent to several of its IBX® data centers, which it did not intend to build out, or its decision to reverse such restructuring charges. Equinix also excludes impairment charges generally related to certain long-lived assets. The impairment charges are related to expense recognized whenever events or changes in circumstances indicate that the carrying amount of assets are not recoverable. Equinix also excludes gain or loss on asset sales as it represents profit or loss that is not meaningful in evaluating the current or future operating performance. Finally, Equinix excludes transaction costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The transaction costs relate to costs Equinix incurs in connection with business combinations and formation of joint ventures, including advisory, legal, accounting, valuation and other professional or consulting fees. Such charges generally are not relevant to assessing the long-term performance of Equinix. In addition, the frequency and amount of such charges vary significantly based on the size and timing of the transactions. Management believes items such as restructuring charges, impairment charges, transaction costs and gain or loss on asset sales are non-core transactions; however, these types of costs may occur in future periods.

Equinix also presents funds from operations (“FFO”) and adjusted funds from operations (“AFFO”), both commonly used in the REIT industry, as supplemental performance measures. Additionally, Equinix presents AFFO per share, which is also commonly used in the REIT industry. AFFO per share offers investors and industry analysts a perspective of Equinix’s underlying operating performance when compared to other REIT companies. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income or loss, excluding gain or loss from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures’ and non-controlling interests’ share of these items. AFFO represents FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, stock-based charitable contributions, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, gain or loss on debt extinguishment, an income tax expense adjustment, recurring capital expenditures, net income or loss from discontinued operations, net of tax and adjustments from FFO to AFFO for unconsolidated joint ventures’ and non-controlling interests’ share of these items. Equinix excludes depreciation expense, amortization expense, accretion, stock-based compensation, restructuring charges, impairment charges and transaction costs for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.

Equinix includes an adjustment for revenues from installation fees, since installation fees are deferred and recognized ratably over the period of contract term, although the fees are generally paid in a lump sum upon installation. Equinix includes an adjustment for straight-line rent expense on its operating leases, since the total minimum lease payments are recognized ratably over the lease term, although the lease payments generally increase over the lease term. Equinix also includes an adjustment to contract costs incurred to obtain contracts, since contract costs are capitalized and amortized over the estimated period of benefit on a straight-line basis, although costs of obtaining contracts are generally incurred and paid during the period of obtaining the contracts. The adjustments for installation revenues, straight-line rent expense and contract costs are intended to isolate the cash activity included within the straight-lined or amortized results in the consolidated statement of operations. Equinix excludes the amortization of deferred financing costs and debt discounts and premiums as these expenses relate to the initial costs incurred in connection with its debt financings that have no current or future cash obligations. Equinix excludes gain or loss on debt extinguishment since it represents a cost that is not a good indicator of Equinix’s current or future operating performance. Equinix includes an income tax expense adjustment, which represents the non-cash tax impact due to changes in valuation allowances and uncertain tax positions that do not relate to the current period’s operations. Equinix excludes recurring capital expenditures, which represent expenditures to extend the useful life of its IBX and xScale data centers or other assets that are required to support current revenues. Equinix also excludes net income or loss from discontinued operations, net of tax, which represents results that are not a good indicator of our current or future operating performance.

Equinix presents constant currency results of operations, which is a non-GAAP financial measure and is not meant to be considered in isolation or as an alternative to GAAP results of operations. However, Equinix has presented this non-GAAP financial measure to provide investors with an additional tool to evaluate its operating results without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Equinix’s business performance. To present this information, Equinix’s current and comparative prior period revenues and certain operating expenses from entities with functional currencies other than the U.S. dollar are converted into U.S. dollars at a consistent exchange rate for purposes of each result being compared.

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. Equinix presents such non-GAAP financial measures to provide investors with an additional tool to evaluate its operating results in a manner that focuses on what management believes to be its core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods. Equinix believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze Equinix effectively.

Investors should note that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as those of other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by us to similarly titled non-GAAP financial measures of other companies. Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income or loss from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, risks to our business and operating results related to the current inflationary environment; foreign currency exchange rate fluctuations; increased costs to procure power and the general volatility in the global energy market; the challenges of acquiring, operating and constructing IBX and xScale data centers and developing, deploying and delivering Equinix products and solutions; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenues from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; risks related to our taxation as a REIT and other risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent and upcoming Equinix quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.

 

EQUINIX, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended

March 31,
2023

December 31,
2022

March 31,
2022

Recurring revenues

$ 1,890,080

$   1,773,380

$ 1,642,324

Non-recurring revenues

108,129

97,465

92,123

Revenues

1,998,209

1,870,845

1,734,447

Cost of revenues

1,006,091

970,700

915,875

Gross profit

992,118

900,145

818,572

Operating expenses:

Sales and marketing

210,671

207,233

192,511

General and administrative

394,874

400,183

352,687

Transaction costs

1,600

10,529

4,240

Loss on asset sales

852

1,818

Total operating expenses

607,997

617,945

551,256

Income from operations

384,121

282,200

267,316

Interest and other income (expense):

Interest income

19,388

18,462

2,106

Interest expense

(97,481)

(94,200)

(79,965)

Other income (expense)

7,503

(28,895)

(9,549)

Gain on debt extinguishment

254

143

529

Total interest and other, net

(70,336)

(104,490)

(86,879)

Income before income taxes

313,785

177,710

180,437

Income tax expense

(55,055)

(48,807)

(32,744)

Net income

258,730

128,903

147,693

Net (income) loss attributable to non-controlling interests

56

(140)

(240)

Net income attributable to Equinix

$     258,786

$      128,763

$     147,453

Net income per share attributable to Equinix:

Basic net income per share

$           2.78

$             1.39

$           1.62

Diluted net income per share

$           2.77

$             1.39

$           1.62

Shares used in computing basic net income per share

92,971

92,573

90,771

Shares used in computing diluted net income per share

93,340

92,752

91,162

 

EQUINIX, INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

Three Months Ended

March 31,
2023

December 31,
2022

March 31,
2022

Net income

$     258,730

$     128,903

$     147,693

Other comprehensive income, net of tax:

Foreign currency translation adjustment (“CTA”) gain (loss)

157,214

796,716

(122,534)

Net investment hedge CTA gain (loss)

(39,960)

(379,960)

91,358

Unrealized gain (loss) on cash flow hedges

(12,881)

(50,231)

64,037

Net actuarial loss on defined benefit plans

(115)

(42)

(21)

Total other comprehensive loss, net of tax

104,258

366,483

32,840

Comprehensive income, net of tax

362,988

495,386

180,533

Net (income) loss attributable to non-controlling interests

56

(140)

(240)

Other comprehensive income attributable to non-controlling interests

(12)

(3)

Comprehensive income attributable to Equinix

$     363,044

$     495,234

$     180,290

 

EQUINIX, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

March 31, 2023

December 31, 2022

Assets

Cash and cash equivalents

$                  2,642,578

$              1,906,421

Accounts receivable, net

913,413

855,380

Other current assets

437,155

459,138

Assets held for sale

84,316

          Total current assets

3,993,146

3,305,255

Property, plant and equipment, net

16,913,734

16,649,534

Operating lease right-of-use assets

1,403,716

1,427,950

Goodwill

5,712,063

5,654,217

Intangible assets, net

1,859,655

1,897,649

Other assets

1,391,884

1,376,137

          Total assets

$                31,274,198

$            30,310,742

Liabilities and Stockholders’ Equity

Accounts payable and accrued expenses

$                     933,290

$              1,004,800

Accrued property, plant and equipment

287,911

281,347

Current portion of operating lease liabilities

141,558

139,538

Current portion of finance lease liabilities

155,447

151,420

Current portion of mortgage and loans payable

9,869

9,847

Other current liabilities

226,077

251,346

          Total current liabilities

1,754,152

1,838,298

Operating lease liabilities, less current portion

1,240,071

1,272,812

Finance lease liabilities, less current portion

2,105,130

2,143,690

Mortgage and loans payable, less current portion

653,235

642,708

Senior notes, less current portion

12,707,851

12,109,539

Other liabilities

784,900

797,863

          Total liabilities

19,245,339

18,804,910

Common stock

94

93

Additional paid-in capital

17,795,701

17,320,017

Treasury stock

(65,988)

(71,966)

Accumulated dividends

(7,639,195)

(7,317,570)

Accumulated other comprehensive loss

(1,285,188)

(1,389,446)

Retained earnings

3,223,624

2,964,838

          Total Equinix stockholders’ equity

12,029,048

11,505,966

Non-controlling interests

(189)

(134)

          Total stockholders’ equity

12,028,859

11,505,832

                Total liabilities and stockholders’ equity

$                31,274,198

$            30,310,742

Ending headcount by geographic region is as follows:

          Americas headcount

5,620

5,493

          EMEA headcount

4,027

3,936

          Asia-Pacific headcount

2,701

2,668

                    Total headcount

12,348

12,097

 

EQUINIX, INC.

Summary of Debt Principal Outstanding

(in thousands)

(unaudited)

March 31, 2023

December 31, 2022

Finance lease liabilities

$                 2,260,577

$                 2,295,110

Term loans

630,052

618,028

Mortgage payable and other loans payable

33,052

34,527

Plus: debt discount and issuance costs, net

1,003

1,062

           Total loans payable principal

664,107

653,617

Senior notes

12,707,851

12,109,539

Plus: debt discount and issuance costs

117,863

117,351

          Total senior notes principal

12,825,714

12,226,890

Total debt principal outstanding

$              15,750,398

$              15,175,617

 

EQUINIX, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,
2023

December 31,
2022

March 31,
2022

Cash flows from operating activities:

Net income

$    258,730

$    128,903

$    147,693

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization and accretion

454,939

438,492

436,386

Stock-based compensation

98,715

107,519

89,952

Amortization of debt issuance costs and debt discounts and premiums

4,590

4,553

4,204

Gain on debt extinguishment

(254)

(143)

(529)

Loss on asset sales

852

1,818

Other items

9,001

44,880

6,050

Changes in operating assets and liabilities:

Accounts receivable

(68,082)

(56,209)

(100,727)

Income taxes, net

4,991

(17,701)

13,881

Accounts payable and accrued expenses

(72,765)

31,511

(75,980)

Operating lease right-of-use assets

34,766

36,171

35,400

Operating lease liabilities

(33,587)

(34,586)

(31,740)

Other assets and liabilities

(16,054)

76,799

54,715

Net cash provided by operating activities

675,842

760,189

581,123

Cash flows from investing activities:

Purchases, sales and maturities of investments, net

(24,393)

(35,222)

(38,558)

Real estate acquisitions

(40,397)

(208,377)

(3,074)

Purchases of other property, plant and equipment

(529,600)

(827,927)

(412,518)

Proceeds from asset sales

87,820

195,391

Net cash used in investing activities

(506,570)

(1,071,526)

(258,759)

Cash flows from financing activities:

Proceeds from employee equity awards

44,543

43,876

Payment of dividend distributions

(326,162)

(287,573)

(289,669)

Proceeds from public offering of common stock, net of offering costs

300,775

Proceeds from mortgage and loans payable

676,850

Proceeds from senior notes, net of debt discounts

565,239

Repayment of finance lease liabilities

(35,498)

(36,394)

(40,773)

Repayment of mortgage and loans payable

(2,403)

(1,714)

(551,833)

Debt issuance costs

(4,257)

(7,366)

Net cash provided by (used in) financing activities

542,237

(325,681)

(168,915)

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

23,883

37,398

4,593

Net increase in cash, cash equivalents and restricted cash

735,392

(599,620)

158,042

Cash, cash equivalents and restricted cash at beginning of period

1,908,248

2,507,868

1,549,454

Cash, cash equivalents and restricted cash at end of period

$ 2,643,640

$ 1,908,248

$ 1,707,496

Supplemental cash flow information:

Cash paid for taxes

$      48,960

$      44,091

$      20,150

Cash paid for interest

$    103,904

$    128,511

$    104,051

Free cash flow (negative free cash flow) (1)

$    193,665

$  (276,115)

$    360,922

Adjusted free cash flow (negative adjusted free cash flow) (2)

$    234,062

$     (67,738)

$    363,996

(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

$    675,842

$    760,189

$    581,123

Net cash used in investing activities as presented above

(506,570)

(1,071,526)

(258,759)

Purchases, sales and maturities of investments, net

24,393

35,222

38,558

Free cash flow (negative free cash flow)

$    193,665

$  (276,115)

$    360,922

(2)

We define adjusted free cash flow (negative adjusted free cash flow) as free cash flow (negative free cash flow) as defined above, excluding any 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

$    193,665

$  (276,115)

$    360,922

Less real estate acquisitions

40,397

208,377

3,074

Adjusted free cash flow (negative adjusted free cash flow)

$    234,062

$     (67,738)

$    363,996

 

EQUINIX, INC.

Non-GAAP Measures and Other Supplemental Data

(in thousands)

(unaudited)

Three Months Ended

March 31,
2023

December 31,
2022

March 31,
2022

Recurring revenues

$  1,890,080

$  1,773,380

$  1,642,324

Non-recurring revenues

108,129

97,465

92,123

Revenues (1)

1,998,209

1,870,845

1,734,447

Cash cost of revenues (2)

665,978

642,176

583,703

Cash gross profit (3)

1,332,231

1,228,669

1,150,744

Cash operating expenses (4)(7):

Cash sales and marketing expenses (5)

140,310

140,697

124,706

Cash general and administrative expenses (6)

247,638

249,232

226,326

Total cash operating expenses (4)(7)

387,948

389,929

351,032

Adjusted EBITDA (8)

$     944,283

$     838,740

$     799,712

Cash gross margins (9)

67 %

66 %

66 %

Adjusted EBITDA margins(10)

47 %

45 %

46 %

Adjusted EBITDA flow-through rate (11)

83 %

(107) %

43 %

FFO (12)

$     548,152

$     406,945

$     432,644

AFFO (13)(14)

$     801,793

$     657,818

$     652,632

Basic FFO per share (15)

$            5.90

$            4.40

$            4.77

Diluted FFO per share (15)

$            5.87

$            4.39

$            4.75

Basic AFFO per share (15)

$            8.62

$            7.11

$            7.19

Diluted AFFO per share (15)

$            8.59

$            7.09

$            7.16

(1)

The geographic split of our revenues on a services basis is presented below:

Americas Revenues:

Colocation

$     574,098

$     568,240

$     522,171

Interconnection

198,639

197,337

181,103

Managed infrastructure

60,860

59,244

49,222

Other

4,872

4,885

5,134

Recurring revenues

838,469

829,706

757,630

Non-recurring revenues

43,906

42,065

42,791

Revenues

$     882,375

$     871,771

$     800,421

EMEA Revenues:

Colocation

$     515,611

$     450,480

$     414,569

Interconnection

72,606

66,710

68,140

Managed infrastructure

31,424

29,431

30,990

Other

25,200

23,882

6,414

Recurring revenues

644,841

570,503

520,113

Non-recurring revenues

46,376

31,208

30,367

Revenues

$     691,217

$     601,711

$     550,480

Asia-Pacific Revenues:

Colocation

$     318,705

$     291,480

$     282,615

Interconnection

65,562

61,572

59,987

Managed infrastructure

18,963

17,819

20,642

Other

3,540

2,300

1,337

Recurring revenues

406,770

373,171

364,581

Non-recurring revenues

17,847

24,192

18,965

Revenues

$     424,617

$     397,363

$     383,546

Worldwide Revenues:

Colocation

$  1,408,414

$  1,310,200

$  1,219,355

Interconnection

336,807

325,619

309,230

Managed infrastructure

111,247

106,494

100,854

Other

33,612

31,067

12,885

Recurring revenues

1,890,080

1,773,380

1,642,324

Non-recurring revenues

108,129

97,465

92,123

Revenues

$  1,998,209

$  1,870,845

$  1,734,447

(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

$  1,006,091

$     970,700

$     915,875

Depreciation, amortization and accretion expense

(328,790)

(316,549)

(321,729)

Stock-based compensation expense

(11,323)

(11,975)

(10,443)

Cash cost of revenues

$     665,978

$     642,176

$     583,703

The geographic split of our cash cost of revenues is presented below:

Americas cash cost of revenues

$     245,407

$     263,374

$     239,403

EMEA cash cost of revenues

271,179

226,574

202,848

Asia-Pacific cash cost of revenues

149,392

152,228

141,452

Cash cost of revenues

$     665,978

$     642,176

$     583,703

(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

$     605,545

$     607,416

$     545,198

Depreciation and amortization expense

(130,205)

(121,943)

(114,657)

Stock-based compensation expense

(87,392)

(95,544)

(79,509)

Cash operating expense

$     387,948

$     389,929

$     351,032

(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

$     210,671

$     207,233

$     192,511

Depreciation and amortization expense

(50,856)

(49,604)

(47,621)

Stock-based compensation expense

(19,505)

(16,932)

(20,184)

Cash sales and marketing expense

$     140,310

$     140,697

$     124,706

(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

$     394,874

$     400,183

$     352,687

Depreciation and amortization expense

(79,349)

(72,339)

(67,036)

Stock-based compensation expense

(67,887)

(78,612)

(59,325)

Cash general and administrative expense

$     247,638

$     249,232

$     226,326

(7)

The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below:

Americas cash SG&A

$     231,881

$     214,560

$     204,463

EMEA cash SG&A

93,525

104,648

87,287

Asia-Pacific cash SG&A

62,542

70,721

59,282

Cash SG&A

$     387,948

$     389,929

$     351,032

(8)

We define adjusted EBITDA as net income excluding income tax expense, interest income, interest expense, other income or expense, loss or gain on debt extinguishment, depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction costs, and gain or loss on asset sales as presented below:

Net income

$     258,730

$     128,903

$     147,693

Income tax expense

55,055

48,807

32,744

Interest income

(19,388)

(18,462)

(2,106)

Interest expense

97,481

94,200

79,965

Other expense (income)

(7,503)

28,895

9,549

Gain on debt extinguishment

(254)

(143)

(529)

Depreciation, amortization and accretion expense

458,995

438,492

436,386

Stock-based compensation expense

98,715

107,519

89,952

Transaction costs

1,600

10,529

4,240

Loss on asset sales

852

1,818

Adjusted EBITDA

$     944,283

$     838,740

$     799,712

The geographic split of our adjusted EBITDA is presented below:

Americas net loss

$    (40,492)

$    (67,580)

$    (19,572)

Americas income tax expense (benefit)

55,142

(33,279)

32,744

Americas interest income

(15,175)

(16,259)

(1,728)

Americas interest expense

84,280

83,363

70,730

Americas other expense (income)

5,104

104,539

(23,390)

Americas gain on debt extinguishment

(261)

Americas depreciation, amortization and accretion expense

245,107

237,919

230,086

Americas stock-based compensation expense

67,814

76,131

63,917

Americas transaction costs

477

9,003

2,991

Americas loss on asset sales

2,830

1,038

Americas adjusted EBITDA

$     405,087

$     393,837

$     356,555

EMEA net income

$     199,015

$     195,224

$        98,388

EMEA income tax expense

16,531

EMEA interest income

(2,540)

(1,251)

(267)

EMEA interest expense

4,149

2,675

916

EMEA other expense (income)

(16,480)

(77,880)

29,171

EMEA depreciation, amortization and accretion expense

124,675

116,097

114,866

EMEA stock-based compensation expense

18,836

18,840

16,112

EMEA transaction costs

836

253

1,157

EMEA (gain) loss on asset sales

(1,978)

2

EMEA adjusted EBITDA

$     326,513

$     270,489

$     260,345

Asia-Pacific net income

$     100,207

$          1,259

$        68,877

Asia-Pacific income tax expense (benefit)

(87)

65,555

Asia-Pacific interest income

(1,673)

(952)

(111)

Asia-Pacific interest expense

9,052

8,162

8,319

Asia-Pacific other expense

3,873

2,236

3,768

Asia-Pacific gain on debt extinguishment

(254)

(143)

(268)

Asia-Pacific depreciation, amortization and accretion expense

89,213

84,476

91,434

Asia-Pacific stock-based compensation expense

12,065

12,548

9,923

Asia-Pacific transaction costs

287

1,273

92

Asia-Pacific loss on asset sales

778

Asia-Pacific adjusted EBITDA

$     212,683

$     174,414

$     182,812

(9)

We define cash gross margins as cash gross profit divided by revenues.

Our cash gross margins by geographic region are presented below:

Americas cash gross margins

72 %

70 %

70 %

EMEA cash gross margins

61 %

62 %

63 %

Asia-Pacific cash gross margins

65 %

62 %

63 %

(10)

We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.

Americas adjusted EBITDA margins

46 %

45 %

45 %

EMEA adjusted EBITDA margins

47 %

45 %

47 %

Asia-Pacific adjusted EBITDA margins

50 %

44 %

48 %

(11)

We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as follows:

Adjusted EBITDA – current period

$     944,283

$     838,740

$     799,712

Less adjusted EBITDA – prior period

(838,740)

(870,916)

(787,577)

Adjusted EBITDA growth

$     105,543

$    (32,176)

$        12,135

Revenues – current period

$  1,998,209

$  1,870,845

$  1,734,447

Less revenues – prior period

(1,870,845)

(1,840,659)

(1,706,378)

Revenue growth

$     127,364

$        30,186

$        28,069

Adjusted EBITDA flow-through rate

83 %

(107) %

43 %

(12)

FFO is defined as net income or loss, excluding gain or loss from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures’ and non-controlling interests’ share of these items.

Net income

$     258,730

$     128,903

$     147,693

Net (income) loss attributable to non-controlling interests

56

(140)

(240)

Net income attributable to Equinix

258,786

128,763

147,453

Adjustments:

Real estate depreciation

283,681

274,625

280,196

Loss on disposition of real estate property

2,561

437

2,845

Adjustments for FFO from unconsolidated joint ventures

3,124

3,120

2,150

FFO attributable to common shareholders

$     548,152

$     406,945

$     432,644

(13)

AFFO is defined as FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, stock-based charitable contributions, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, gain or loss on debt extinguishment, an income tax expense adjustment, net income or loss from discontinued operations, net of tax, recurring capital expenditures and adjustments from FFO to AFFO for unconsolidated joint ventures’ and non-controlling interests’ share of these items.

FFO attributable to common shareholders

$     548,152

$     406,945

$     432,644

Adjustments:

Installation revenue adjustment

(2,237)

6,975

845

Straight-line rent expense adjustment

1,179

1,585

3,660

Amortization of deferred financing costs and debt discounts and premiums

4,590

4,553

4,204

Contract cost adjustment

(6,682)

(17,380)

(14,939)

Stock-based compensation expense

98,715

107,519

89,952

Stock-based charitable contributions

34,974

Non-real estate depreciation expense

120,945

111,342

105,575

Amortization expense

52,474

51,438

49,569

Accretion expense

1,895

1,086

1,046

Recurring capital expenditures

(21,729)

(80,047)

(23,881)

Gain on debt extinguishment

(254)

(143)

(529)

Transaction costs

1,600

10,529

4,240

Income tax expense (benefit) adjustment

1,582

19,806

(323)

Adjustments for AFFO from unconsolidated joint ventures

1,563

(1,364)

569

AFFO attributable to common shareholders

$     801,793

$     657,818

$     652,632

(14)

 Following is how we reconcile from adjusted EBITDA to AFFO:

Adjusted EBITDA

$     944,283

$     838,740

$     799,712

Adjustments:

Interest expense, net of interest income

(78,093)

(75,738)

(77,859)

Amortization of deferred financing costs and debt discounts and premiums

4,590

4,553

4,204

Income tax expense

(55,055)

(48,807)

(32,744)

Income tax expense (benefit) adjustment

1,582

19,806

(323)

Straight-line rent expense adjustment

1,179

1,585

3,660

Stock-based charitable contributions

34,974

Contract cost adjustment

(6,682)

(17,380)

(14,939)

Installation revenue adjustment

(2,237)

6,975

845

Recurring capital expenditures

(21,729)

(80,047)

(23,881)

Other (expense) income

7,503

(28,895)

(9,549)

Loss on disposition of real estate property

2,561

437

2,845

Adjustments for unconsolidated JVs’ and non-controlling interests

4,743

1,615

2,479

Adjustment for loss on sale of assets

(852)

(1,818)

AFFO attributable to common shareholders

$     801,793

$     657,818

$     652,632

(15)

The shares used in the computation of basic and diluted FFO and AFFO per share attributable to Equinix is presented below:

Shares used in computing basic net income per share, FFO per share and AFFO per share

92,971

92,573

90,771

Effect of dilutive securities:

Employee equity awards

369

179

391

Shares used in computing diluted net income per share, FFO per share and AFFO per share

93,340

92,752

91,162

Basic FFO per share

$            5.90

$            4.40

$            4.77

Diluted FFO per share

$            5.87

$            4.39

$            4.75

Basic AFFO per share

$            8.62

$            7.11

$            7.19

Diluted AFFO per share

$            8.59

$            7.09

$            7.16

 

Equinix.  (PRNewsFoto/Equinix) (PRNewsfoto/Equinix, Inc.)

 

SOURCE Equinix, Inc.




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