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Equinix Reports Second Quarter 2020 Results
Interconnection and Data Center Leader Delivers Another Consecutive Quarter of Revenue and Interconnection Growth

REDWOOD CITY, Calif., July 29, 2020 /PRNewswire/ --

  • Quarterly revenues increased 6% over the same quarter last year to $1.470 billion, or 8% on a normalized and constant currency basis, representing the 70th consecutive quarter of revenue growth
  • Delivered one of the strongest quarters of interconnection growth and activity in the company's history
  • Customer deployments across multiple metros comprised 88% of total recurring revenues, demonstrating the value of the Equinix global platform

Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported results for the quarter ended June 30, 2020. 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.

Second Quarter 2020 Results Summary

  • Revenues
    • $1.470 billion, a 2% increase over the previous quarter
    • Includes a $3 million foreign currency benefit when compared to prior guidance rates
  • Operating Income
    • $282 million, an 11% increase over the previous quarter and an operating margin of 19%
  • Adjusted EBITDA
    • $720 million, a 49% adjusted EBITDA margin
    • Includes a $1 million foreign currency benefit when compared to prior guidance rates
    • Includes $2 million of integration costs
  • Net Income and Net Income per Share attributable to Equinix
    • $133 million, a 12% increase over the previous quarter
    • $1.52 per share, a 10% increase over the previous quarter
  • AFFO and AFFO per Share
    • $558 million, a 4% increase over the previous quarter
    • $6.35 per share, a 2% increase over the previous quarter
    • Includes $2 million of integration costs

2020 Annual Guidance Summary

  • Revenues
    • $5.919 - $5.989 billion, a 6 - 8% increase over the previous year, or a normalized and constant currency increase of 8 - 9%
    • An increase of $23 million due to a foreign currency benefit when compared to the prior guidance FX rates
  • Adjusted EBITDA
    • $2.781 - $2.851 billion, a 47% adjusted EBITDA margin
    • An increase of $11 million due to a foreign currency benefit when compared to the prior guidance FX rates
    • Assumes $20 million of integration costs
  • AFFO and AFFO per Share
    • $2.107 - $2.177 billion, an increase of 9 - 13% over the previous year, or a normalized and constant currency increase of 14 - 18%; an increase of $54 million compared to prior guidance, including an $11 million foreign currency benefit
    • $23.87 - $24.67 per share, an increase of 5 - 8% over the previous year, or a normalized and constant currency increase of 8 - 12%; reaffirms prior full-year AFFO per share guidance while fully absorbing the dilution impact from the $1.7 billion public offering of common stock
    • Assumes $20 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:

"Even in the face of an uncertain macro environment created by the global pandemic, the Equinix business continues to perform well. The demand drivers for digital infrastructure have never been stronger, and our relevance in enabling our customers to respond effectively to their digital transformation imperatives continues to increase. The power of our global platform and the resiliency and adaptability of our global teams are helping us create distinct and durable value for our customers, driving strong business results and allowing us to remain focused on delivering a positive impact to our many stakeholders as we build an enduring and sustainable culture and business."

Business Highlights

  • Equinix continued to invest in building out its global platform in response to strong customer demand and a high level of inventory utilization:
    • On May 29, Equinix entered into an agreement to purchase a portfolio of 13 data center sites, representing 25 data centers, across Canada from BCE Inc. ("Bell") for approximately $750 million. The addition of these strategic assets, their associated operations and the more than 600 customers operating within the data centers will further strengthen Equinix's global platform. The acquisition will expand Equinix's coverage in Canada coast to coast, making it a market leader in data center and interconnection services. In addition to adding new capacity in Toronto, Ontario, where Equinix currently operates two International Business Exchange™ (IBX®) data centers, it will extend Equinix's interconnection services to seven new metros.
    • Equinix continues its investment in organic growth and expansion activities with 29 major expansion projects underway in 20 markets across 14 countries.
    • Additionally, Equinix completed seven new openings or phased expansions in Q2 in Amsterdam, Chicago, Dallas, Hamburg, Hong Kong, Toronto and Washington, D.C.
  • In Q2, Equinix opened the 5G and Edge Proof of Concept Center (POCC) at its Dallas Infomart campus, which provides a 5G and edge "sandbox" environment, enabling Mobile Network Operators (MNOs), cloud platforms, technology vendors and enterprises to directly connect with the largest edge data center platform in order to test, demonstrate and accelerate complex 5G and edge deployment and interoperability scenarios. The POCC will support the growing demand for companies to accelerate their evolution from traditional to digital businesses.
  • Equinix continues to strengthen its leadership position in the cloud ecosystem through the company's hyperscale strategy, expanding its footprint to service both retail and large footprint hyperscale requirements in key markets, while leveraging its joint venture relationship with GIC. Equinix is seeing strong customer demand in its initial European xScale JV™ with GIC, and is expected to expand this JV with its PA9x asset, which is expected to open early next year and is already 100% pre-leased to a major hyperscaler. Equinix is also targeting to close its new xScale JV in Japan with GIC in Q4, adding hyperscale assets in both Osaka and Tokyo.
  • Interconnection revenues in Q2 grew 14% year-over-year, or 16% on a normalized and constant currency basis, steadily rising over the last few quarters, reflecting the demand across the Equinix portfolio for interconnection products. Today, Equinix has the most comprehensive global interconnection platform, comprising over 378,000 physical and virtual interconnections. In Q2, Equinix added an incremental 8,000 interconnections, fueled by streaming, video conferencing, enterprise cloud connectivity and work-from-home local aggregation.
  • Equinix had strong bookings across all three regions (Americas, EMEA and Asia-Pacific) in Q2, with record bookings in the Americas. The network vertical also achieved record bookings, driven by robust network reseller activity and network expansions to support traffic growth. The financial services vertical captured its second-highest bookings, with strength in global financial and insurance firms as they embrace digital transformation.
  • Equinix's financial strength remains a significant and strategic advantage. In May, Equinix raised approximately $1.7 billion in common stock to support the continued organic and inorganic growth of the business and received its third investment grade rating when Moody's upgraded Equinix's corporate debt rating to Baa3 from Ba1. In June, Equinix leveraged the company's investment-grade ratings by refinancing $2.6 billion of high-yield debt at a blended interest rate of 2.07%. The interest savings from the refinancing effectively offset the dilution associated with equity raise.

COVID-19 Update

Many of the Company's IBX data centers have been identified as "essential businesses" or "critical infrastructure" by local governments for purposes of remaining open during the COVID-19 pandemic, and all IBX data centers remain operational at the time of filing of this press release. Precautionary measures have been implemented to minimize the risk of operational impact and to protect the health and safety of employees, customers, partners and communities. These include implementing tools such as an appointment-based system to control timing and frequency of visits, while also encouraging customers to leverage IBX technicians via Smart Hands® in order to restrict visits and minimize the number of people and the amount of time spent in the Company's IBX facilities. For the health and safety of Equinix employees, the Company's corporate offices were closed in March and non-IBX employees across the globe were instructed to work from home until further notice. Recently, a phased plan has been announced for a return-to-office for non-IBX attached sites, and the Company will begin to open certain offices as local conditions allow. Additionally, the Company has decided to continue to limit employee travel and has made the decision to either postpone or virtualize all global events through January 2021.

Looking ahead, the full impact of the COVID-19 pandemic on the Company's financial condition or results of operations remains uncertain and will depend on a number of factors, including its impact on Equinix customers, partners and vendors and the impact on, and functioning of, the global financial markets. The Company's past results may not be indicative of future performance, and historical trends may differ materially. Additional information pertaining to the impact of COVID-19 on Equinix and the Company's response thereto will be provided in the upcoming Form 10-Q for the quarter ended June 30, 2020.

Business Outlook

For the third quarter of 2020, the Company expects revenues to range between $1.493 and $1.513 billion, an increase of 2 - 3% quarter-over-quarter, or a normalized and constant currency increase of approximately 1 - 3%. This guidance includes a $5 million foreign currency benefit when compared to the average foreign currency ("FX") rates in Q2 2020. Adjusted EBITDA is expected to range between $696 and $716 million, including a $3 million foreign currency benefit when compared to the average FX rates in Q2 2020 and $5 million of integration costs from acquisitions. Recurring capital expenditures are expected to range between $36 and $46 million.

For the full year of 2020, total revenues are expected to range between $5.919 and $5.989 billion, a 6 - 8% increase over the previous year, or a normalized and constant currency increase of approximately 8 - 9%. This $23 million guidance raise is due to a foreign currency benefit when compared to the prior guidance FX rates. Adjusted EBITDA is expected to range between $2.781 and $2.851 billion, an adjusted EBITDA margin of 47% at the mid-point. This $11 million guidance raise is due to a foreign currency benefit when compared to the prior guidance FX rates. For the year, the company expects to incur $20 million in integration costs related to acquisitions. AFFO is expected to range between $2.107 and $2.177 billion, an increase of 9 - 13% over the previous year, or a normalized and constant currency increase of 14 - 18% and $20 million of integration costs related to our acquisitions. This $54 million guidance raise includes an $11 million foreign currency benefit when compared to prior guidance rates. AFFO per share is expected to range between $23.87 and $24.67, an increase of 5 - 8% over the previous year, or a normalized and constant currency increase of 8 - 12%. This guidance reaffirms prior full-year underlying AFFO per share guidance while fully absorbing the dilution impact from the $1.7 billion public offering of common stock that the company undertook in the second quarter. This guidance excludes any potential financing or refinancing the Company may undertake in the future. Non-recurring capital expenditures are expected to range between $2.050 and $2.240 billion, including $150 million of incremental xScale capital expenditures which we expect to transfer to the Japan JV in Q4, and recurring capital expenditures are expected to range between $150 and $160 million.

The U.S. dollar exchange rates used for 2020 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.13 to the Euro, $1.28 to the Pound, S$1.39 to the U.S. dollar, ¥108 to the U.S. dollar, and R$5.41 to the U.S. dollar. The Q2 2020 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 20%, 10%, 7%, 7% 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.

Q2 2020 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended June 30, 2020, along with its future outlook, in its quarterly conference call on Wednesday, July 29, 2020, 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, November 4, 2020, by dialing 1-203-369-3598 and referencing the passcode 2020. 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, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most-interconnected data centers. On this global platform for digital business, companies come together across more than 55 markets on five continents to reach everywhere, interconnect everyone and integrate everything they need to create their digital futures.

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 income from operations excluding 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 an IBX data center, and do not reflect its current or future cash spending levels to support its business. Its IBX data centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of an IBX 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 IBX 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 IBX data centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX 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 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 long-lived 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. 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, 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 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 COVID-19 pandemic; the challenges of acquiring, operating and constructing IBX 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


Six Months Ended


June 30,
2020


March 31,
2020


June 30,
2019


June 30,
2020


June 30,
2019

Recurring revenues

$

1,398,138



$

1,361,694



$

1,306,045



$

2,759,832



$

2,580,873


Non-recurring revenues

71,983



82,848



78,932



154,831



167,322


Revenues

1,470,121



1,444,542



1,384,977



2,914,663



2,748,195


Cost of revenues

739,344



736,282



698,179



1,475,626



1,380,209


Gross profit

730,777



708,260



686,798



1,439,037



1,367,986


Operating expenses:










Sales and marketing

178,124



180,450



159,201



358,574



328,916


General and administrative

256,890



261,597



232,656



518,487



447,702


Transaction costs

13,617



11,530



2,774



25,147



5,245


Impairment charges





386





14,834


(Gain) loss on asset sales

(342)



1,199





857




Total operating expenses

448,289



454,776



395,017



903,065



796,697


Income from operations

282,488



253,484



291,781



535,972



571,289


Interest and other income (expense):









Interest income

1,685



4,273



7,762



5,958



11,964


Interest expense

(108,480)



(107,338)



(120,547)



(215,818)



(243,393)


Other income

4,278



5,170



12,180



9,448



12,014


Loss on debt extinguishment

(1,868)



(6,441)





(8,309)



(382)


Total interest and other, net

(104,385)



(104,336)



(100,605)



(208,721)



(219,797)


Income before income taxes

178,103



149,148



191,176



327,251



351,492


Income tax expense

(44,753)



(30,191)



(47,324)



(74,944)



(89,893)


Net income

133,350



118,957



143,852



252,307



261,599


Net (income) loss attributable to non-controlling interests

(46)



(165)



(325)



(211)



6


Net income attributable to Equinix

$

133,304



$

118,792



$

143,527



$

252,096



$

261,605


Net income per share attributable to Equinix:

Basic net income per share

$

1.53



$

1.39



$

1.70



$

2.92



$

3.15


Diluted net income per share

$

1.52



$

1.38



$

1.69



$

2.90



$

3.13


Shares used in computing basic net income per share

87,303



85,551



84,399



86,427



83,114


Shares used in computing diluted net income per share

87,901



86,144



84,767



87,065



83,471


 

EQUINIX, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)






Three Months Ended


Six Months Ended


June 30,
2020


March 31,
2020


June 30,
2019


June 30,
2020


June 30,
2019

Net income

$

133,350



$

118,957



$

143,852



$

252,307



$

261,599


Other comprehensive loss, net of tax:







Foreign currency translation adjustment ("CTA") gain (loss)

181,286



(413,792)



25,127



(232,506)



(56,592)


Net investment hedge CTA gain (loss)

(97,058)



144,946



(37,857)



47,888



38,993


Unrealized gain (loss) on cash flow hedges

(17,868)



(3,256)



(3,355)



(21,124)



4,869


Net actuarial gain (loss) on defined benefit plans

20



35



(7)



55



(18)


Total other comprehensive income (loss), net of tax

66,380



(272,067)



(16,092)



(205,687)



(12,748)


Comprehensive income (loss), net of tax

199,730



(153,110)



127,760



46,620



248,851


Net (income) loss attributable to non-controlling interests

(46)



(165)



(325)



(211)



6


Other comprehensive (income) loss attributable to non-controlling interests

(2)



11



14



9



7


Comprehensive income (loss) attributable to Equinix

$

199,682



$

(153,264)



$

127,449



$

46,418



$

248,864


 

EQUINIX, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)






June 30, 2020


December 31, 2019

Assets




Cash and cash equivalents

$

4,785,050



$

1,869,577


Short-term investments

22,069



10,362


Accounts receivable, net

691,589



689,134


Other current assets

330,521



302,880


Assets held for sale

152,188



663


          Total current assets

5,981,417



2,872,616


Property, plant and equipment, net

12,663,827



12,152,597


Operating lease right-of-use assets

1,396,101



1,475,367


Goodwill

5,016,350



4,781,858


Intangible assets, net

2,074,689



2,102,389


Other assets

660,246



580,788


          Total assets

$

27,792,630



$

23,965,615


Liabilities and Stockholders' Equity




Accounts payable and accrued expenses

$

745,517



$

760,718


Accrued property, plant and equipment

335,013



301,535


Current portion of operating lease liabilities

139,833



145,606


Current portion of finance lease liabilities

102,416



75,239


Current portion of mortgage and loans payable

75,589



77,603


Current portion of senior notes

2,227,768



643,224


Other current liabilities

229,635



153,938


          Total current liabilities

3,855,771



2,157,863


Operating lease liabilities, less current portion

1,243,362



1,315,656


Finance lease liabilities, less current portion

1,658,432



1,430,882


Mortgage and loans payable, less current portion

1,218,049



1,289,434


Senior notes, less current portion

8,804,633



8,309,673


Other liabilities

624,125



621,725


          Total liabilities

17,404,372



15,125,233


Common stock

89



86


Additional paid-in capital

14,651,944



12,696,433


Treasury stock

(127,042)



(144,256)


Accumulated dividends

(4,639,041)



(4,168,469)


Accumulated other comprehensive loss

(1,140,291)



(934,613)


Retained earnings

1,642,621



1,391,425


          Total Equinix stockholders' equity

10,388,280



8,840,606


Non-controlling interests

(22)



(224)


          Total stockholders' equity

10,388,258



8,840,382


                Total liabilities and stockholders' equity

$

27,792,630



$

23,965,615






Ending headcount by geographic region is as follows:




 Americas headcount

4,103



3,672


          EMEA headcount

3,172



2,941


 Asia-Pacific headcount

1,906



1,765


                    Total headcount

9,181



8,378


 

EQUINIX, INC.
Summary of Debt Principal Outstanding
(in thousands)
(unaudited)






June 30, 2020


December 31, 2019





Finance lease liabilities

$

1,760,848



$

1,506,121






Term loans

1,214,332



1,282,302


Mortgage payable and other loans payable

79,306



84,735


Plus: debt discount and issuance costs, net

2,195



3,081


           Total mortgage and loans payable principal

1,295,833



1,370,118






Senior notes

11,032,401



8,952,897


Plus: debt issuance costs

108,519



78,030


Less: debt premium

(745)



(1,716)


          Total senior notes principal

11,140,175



9,029,211






Total debt principal outstanding

$

14,196,856



$

11,905,450


 

EQUINIX, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)








Three Months Ended


Six Months Ended



June 30,
2020


March 31,
2020


June 30,
2019


June 30,
2020


June 30,
2019












Cash flows from operating activities:


Net income

$

133,350



$

118,957



$

143,852



$

252,307



$

261,599



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


Depreciation, amortization and accretion

348,434



337,431



320,550



685,865



635,255



Stock-based compensation

75,844



64,499



61,519



140,343



110,542



Amortization of debt issuance costs and debt discounts and premiums

4,444



3,460



3,238



7,904



6,233



Loss on debt extinguishment

1,868



6,441





8,309



382



(Gain) loss on asset sales

(342)



1,199





857





Impairment charges





386





14,834



Other items

13,891



6,856



4,745



20,747



12,969



Changes in operating assets and liabilities:


Accounts receivable

(29,539)



15,306



(42,370)



(14,233)



(126,720)



Income taxes, net

8,164



3,697



14,837



11,861



30,662



Accounts payable and accrued expenses

117



(25,681)



7,476



(25,564)



(3,987)



Operating lease right-of-use assets

37,495



38,797



37,219



76,292



78,483



Operating lease liabilities

(36,898)



(35,193)



(34,919)



(72,091)



(73,805)



Other assets and liabilities

17,858



(18,939)



26,390



(1,081)



17,617


Net cash provided by operating activities

574,686



516,830



542,923



1,091,516



964,064


Cash flows from investing activities:


Purchases, sales and maturities of investments, net

(1,341)



(38,940)



(3,063)



(40,281)



(11,842)



Business acquisitions, net of cash and restricted cash acquired

39



(478,287)



(34,143)



(478,248)



(34,143)



Purchases of real estate

(46,194)



(36,373)



(41,715)



(82,567)



(47,436)



Purchases of other property, plant and equipment

(481,948)



(400,941)



(444,171)



(882,889)



(808,138)



Proceeds from asset sales










Net cash used in investing activities

(529,444)



(954,541)



(523,092)



(1,483,985)



(901,559)


Cash flows from financing activities:


Proceeds from employee equity awards



30,391





30,391



27,593



Payment of dividend distributions

(236,008)



(233,479)



(208,449)



(469,487)



(413,052)



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

1,683,106



101,792



348,121



1,784,898



1,561,555



Proceeds from mortgage and loans payable

500,790



250,000





750,790





Proceeds from senior notes, net of debt discounts

2,585,736







2,585,736





Repayment of finance lease liabilities

(23,704)



(18,977)



(11,954)



(42,681)



(43,112)



Repayment of mortgage and loans payable

(770,677)



(18,501)



(17,878)



(789,178)



(36,212)



Repayment of senior notes

(150,000)



(343,711)



(150,000)



(493,711)



(150,000)



Debt extinguishment costs



(4,619)





(4,619)





Debt issuance costs

(26,266)







(26,266)




Net cash provided by (used in) financing activities

3,562,977



(237,104)



(40,160)



3,325,873



946,772


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

12,411



(25,287)



2,106



(12,876)



411


Net increase (decrease) in cash, cash equivalents and restricted cash

3,620,630



(700,102)



(18,223)



2,920,528



1,009,688


Cash, cash equivalents and restricted cash at beginning of period

1,186,511



1,886,613



1,655,515



1,886,613



627,604


Cash, cash equivalents and restricted cash at end of period

$

4,807,141



$

1,186,511



$

1,637,292



$

4,807,141



$

1,637,292


Supplemental cash flow information:

Cash paid for taxes

$

15,752



$

45,324



$

32,669



$

61,076



$

59,693


Cash paid for interest

$

122,669



$

125,924



$

113,266



$

248,593



$

259,410













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

$

46,583



$

(398,771)



$

22,894



$

(352,188)



$

74,347













Adjusted free cash flow (2)

$

92,738



$

115,889



$

98,752



$

208,627



$

155,926













(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

$

574,686



$

516,830



$

542,923



$

1,091,516



$

964,064



Net cash used in investing activities as presented above

(529,444)



(954,541)



(523,092)



(1,483,985)



(901,559)



Purchases, sales and maturities of investments, net

1,341



38,940



3,063



40,281



11,842



Free cash flow (negative free cash flow)

$

46,583



$

(398,771)



$

22,894



$

(352,188)



$

74,347













(2)

We define adjusted free cash flow as free cash flow (negative free cash flow) as defined above, excluding any purchases of real estate and business acquisitions, net of cash and restricted cash acquired as presented below:


Free cash flow (negative free cash flow) as defined above

$

46,583



$

(398,771)



$

22,894



$

(352,188)



$

74,347



Less business acquisitions, net of cash and restricted cash acquired

(39)



478,287



34,143



478,248



34,143



Less purchases of real estate

46,194



36,373



41,715



82,567



47,436



Adjusted free cash flow

$

92,738



$

115,889



$

98,752



$

208,627



$

155,926


 

EQUINIX, INC.
Non-GAAP Measures and Other Supplemental Data
(in thousands)
(unaudited)








Three Months Ended


Six Months Ended



June 30, 2020


March 31, 2020


June 30, 2019


June 30, 2020


June 30, 2019


Recurring revenues

$

1,398,138



$

1,361,694



$

1,306,045



$

2,759,832



$

2,580,873



Non-recurring revenues

71,983



82,848



78,932



154,831



167,322



Revenues (1)

1,470,121



1,444,542



1,384,977



2,914,663



2,748,195














Cash cost of revenues (2)

480,946



476,541



460,983



957,487



909,364



Cash gross profit (3)

989,175



968,001



923,994



1,957,176



1,838,831














Cash operating expenses (4)(7):










Cash sales and marketing expenses (5)

111,007



115,671



95,114



226,678



203,330



Cash general and administrative expenses (6)

158,127



168,120



151,870



326,247



298,336



Total cash operating expenses (4)(7)

269,134



283,791



246,984



552,925



501,666














Adjusted EBITDA (8)

$

720,041



$

684,210



$

677,010



$

1,404,251



$

1,337,165














Cash gross margins (9)

67

%


67

%


67

%


67

%


67

%













Adjusted EBITDA margins(10)

49

%


47

%


49

%


48

%


49

%













Adjusted EBITDA flow-through rate (11)

140

%


30

%


77

%


53

%


70

%













FFO (12)

$

356,946



$

343,754



$

352,973



$

700,700



$

679,046














AFFO (13)(14)

$

557,793



$

534,705



$

497,647



$

1,092,498



$

985,767














Basic FFO per share (15)

$

4.09



$

4.02



$

4.18



$

8.11



$

8.17














Diluted FFO per share (15)

$

4.06



$

3.99



$

4.16



$

8.05



$

8.14














Basic AFFO per share (15)

$

6.39



$

6.25



$

5.90



$

12.64



$

11.86














Diluted AFFO per share (15)

$

6.35



$

6.21



$

5.87



$

12.55



$

11.81













(1)

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

















Americas Revenues:






















Colocation

$

447,498



$

450,954



$

444,086



$

898,452



$

884,067



Interconnection

153,387



150,929



142,460



304,316



281,023



Managed infrastructure

28,889



25,529



22,908



54,418



44,695



Other

5,081



5,220



5,352



10,301



11,331



Recurring revenues

634,855



632,632



614,806



1,267,487



1,221,116



Non-recurring revenues

26,564



29,273



29,614



55,837



67,670



Revenues

$

661,419



$

661,905



$

644,420



$

1,323,324



$

1,288,786














EMEA Revenues:






















Colocation

$

381,144



$

362,330



$

347,795



$

743,474



$

678,920



Interconnection

50,904



48,541



38,614



99,445



76,139



Managed infrastructure

29,012



30,137



28,397



59,149



57,485



Other

6,130



2,466



2,275



8,596



4,774



Recurring revenues

467,190



443,474



417,081



910,664



817,318



Non-recurring revenues

20,900



35,435



32,774



56,335



67,197



Revenues

$

488,090



$

478,909



$

449,855



$

966,999



$

884,515














Asia-Pacific Revenues:






















Colocation

$

228,803



$

221,093



$

213,734



$

449,896



$

423,399



Interconnection

45,140



42,671



37,957



87,811



74,653



Managed infrastructure

22,150



21,824



22,467



43,974



44,387



Recurring revenues

296,093



285,588



274,158



581,681



542,439



Non-recurring revenues

24,519



18,140



16,544



42,659



32,455



Revenues

$

320,612



$

303,728



$

290,702



$

624,340



$

574,894














Worldwide Revenues:






















Colocation

$

1,057,445



$

1,034,377



$

1,005,615



$

2,091,822



$

1,986,386



Interconnection

249,431



242,141



219,031



491,572



431,815



Managed infrastructure

80,051



77,490



73,772



157,541



146,567



Other

11,211



7,686



7,627



18,897



16,105



Recurring revenues

1,398,138



1,361,694



1,306,045



2,759,832



2,580,873



Non-recurring revenues

71,983



82,848



78,932



154,831



167,322



Revenues

$

1,470,121



$

1,444,542



$

1,384,977



$

2,914,663



$

2,748,195













(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

$

739,344



$

736,282



$

698,179



$

1,475,626



$

1,380,209



Depreciation, amortization and accretion expense

(250,743)



(250,398)



(230,696)



(501,141)



(459,333)



Stock-based compensation expense

(7,655)



(9,343)



(6,500)



(16,998)



(11,512)



Cash cost of revenues

$

480,946



$

476,541



$

460,983



$

957,487



$

909,364














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

















Americas cash cost of revenues

$

194,467



$

185,233



$

182,920



$

379,700



$

362,555



EMEA cash cost of revenues

177,558



187,248



179,347



364,806



352,548



Asia-Pacific cash cost of revenues

108,921



104,060



98,716



212,981



194,261



Cash cost of revenues

$

480,946



$

476,541



$

460,983



$

957,487



$

909,364







(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

$

435,014



$

442,047



$

391,857



$

877,061



$

776,618



Depreciation and amortization expense

(97,691)



(87,033)



(89,854)



(184,724)



(175,922)



Stock-based compensation expense

(68,189)



(71,223)



(55,019)



(139,412)



(99,030)



Cash operating expense

$

269,134



$

283,791



$

246,984



$

552,925



$

501,666













(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

$

178,124



$

180,450



$

159,201



$

358,574



$

328,916



Depreciation and amortization expense

(48,902)



(46,234)



(48,930)



(95,136)



(97,128)



Stock-based compensation expense

(18,215)



(18,545)



(15,157)



(36,760)



(28,458)



Cash sales and marketing expense

$

111,007



$

115,671



$

95,114



$

226,678



$

203,330













(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

$

256,890



$

261,597



$

232,656



$

518,487



$

447,702



Depreciation and amortization expense

(48,789)



(40,799)



(40,924)



(89,588)



(78,794)



Stock-based compensation expense

(49,974)



(52,678)



(39,862)



(102,652)



(70,572)



Cash general and administrative expense

$

158,127



$

168,120



$

151,870



$

326,247



$

298,336













(7)

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













Americas cash SG&A

$

164,845



$

183,059



$

152,448



$

347,904



$

309,341



EMEA cash SG&A

66,935



61,503



60,863



128,438



123,250



Asia-Pacific cash SG&A

37,354



39,229



33,673



76,583



69,075



Cash SG&A

$

269,134



$

283,791



$

246,984



$

552,925



$

501,666













(8)

We define adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales as presented below:













Income from operations

$

282,488



$

253,484



$

291,781



$

535,972



$

571,289



Depreciation, amortization and accretion expense

348,434



337,431



320,550



685,865



635,255



Stock-based compensation expense

75,844



80,566



61,519



156,410



110,542



Impairment charges





386





14,834



Transaction costs

13,617



11,530



2,774



25,147



5,245



(Gain) loss on asset sales

(342)



1,199





857





Adjusted EBITDA

$

720,041



$

684,210



$

677,010



$

1,404,251



$

1,337,165














The geographic split of our adjusted EBITDA is presented below:

















Americas income from operations

$

58,423



$

47,308



$

99,195



$

105,731



$

189,206



Americas depreciation, amortization and accretion expense

182,204



171,439



167,614



353,643



334,750



Americas stock-based compensation expense

56,326



62,689