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Equinix Reports Fourth Quarter And Full Year 2018 Results
Interconnection and Data Center Leader Delivers 64th Consecutive Quarter of Revenue Growth

REDWOOD CITY, Calif., Feb. 13, 2019 /PRNewswire/ --

  • Delivered 2018 annual revenues of $5.072 billion, an increase of 16% year-over-year; 9% growth on a normalized and constant currency basis
  • Achieved record global gross and net bookings in the quarter
  • 36 expansion projects underway and three new markets added including Hamburg, Muscat and Seoul
  • Continued to scale its global interconnection platform adding an incremental 8,800 interconnections, including 1,800 virtual connections through ECX Fabric™

Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported results for the quarter and the year ended December 31, 2018. 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.

2018 Results Summary

  • Revenues
    • $5.072 billion, a 16% increase over the previous year or a normalized and constant currency increase of 9%
  • Operating Income
    • $977 million, a 21% increase over the previous year
  • Adjusted EBITDA
    • $2.413 billion, a 48% adjusted EBITDA margin
    • Includes $31 million of integration costs
  • Net Income
    • $365 million, a 57% increase over the previous year
  • AFFO
    • $1.659 billion, a 15% increase over the previous year
    • Includes $31 million of integration costs

2019 Annual Guidance Summary

  • Revenues
    • $5.520 - $5.570 billion, a 9 - 10% increase over the previous year
  • Adjusted EBITDA
    • $2.605 - $2.655 billion, a 47% adjusted EBITDA margin
    • Assumes $15 million of integration costs
    • Assumes negative $15 million impact from the adoption of ASC 842
  • AFFO
    • $1.825 - $1.875 billion, a 10 - 13% increase over the previous year
    • Assumes $15 million of integration costs
    • Assumes immaterial impact from the adoption of ASC 842

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.

Quote
Charles Meyers, President and CEO, Equinix:

"In addition to strong financial performance, we continue to build on our market leadership and cement our position as the trusted center of a cloud-first world. Our reach, scale and innovative product portfolio puts us in a great position to build on our business model that is substantially and durably differentiated from our peers. The market remains in the early innings of the digital transformation journey and our accelerating ability to both land and expand customers on that journey, makes us confident that we are playing the best hand in the business. We continue to have a clear view of our strategy and the opportunities ahead, and we are looking forward to another successful year."

Business Highlights

  • Equinix continues to expand the reach of its global platform through organic expansion with 36 projects across 25 markets underway, including expansions in three new markets - Hamburg, Muscat and Seoul. Today, Equinix announced new expansions in the Chicago, Dallas, Hong Kong, Melbourne, New York, Paris, São Paulo, Singapore, Tokyo and Zurich metros.
  • Equinix had very strong bookings across all three regions (Americas, EMEA and Asia-Pacific) in Q4 , with record EMEA bookings, and the second-best booking performance to date in the Americas and Asia-Pacific regions. Equinix bookings this quarter spanned across more than 3,000 customers, with a quarter of those customers buying across multiple metros, highlighting the unique diversity of Equinix's retail colocation business.
  • Enterprises continue to leverage Equinix's highly distributed and cloud-enabled global platform to locate their infrastructure closer to the interconnected digital edge. In Q4, 60% of total recurring revenues came from customers deployed across all three regions, and 86% of total recurring revenues came from customers deployed across multiple metros. 
  • Interconnection revenues continued to outpace colocation revenues in Q4, growing 10% year-over-year on an as-reported basis and 12% on a normalized and constant currency basis. Today, Equinix has the most comprehensive global interconnection platform now comprising over 333,000 physical and virtual interconnections — more than four times the interconnections of any competitor. In Q4, Equinix added an incremental 8,800 interconnections, including 1,800 virtual connections through Equinix Cloud Exchange Fabric™ (ECX Fabric™).
  • Equinix channel sales delivered greater than 20% of the bookings for the third consecutive quarter. This accounted for half of the new logos acquired in the quarter, driven by solid performance across all regions and all partner types. In 2018, the channel delivered over 4,000 unique deals, a strong indication of the significant velocity derived from Equinix's retail selling engine. 
  • Equinix achieved a record number of new wins across multiple verticals in Q4. The content and digital media vertical experienced record bookings with meaningful customer expansions including Fastly, Roblox and Tencent. The Cloud and IT vertical also delivered record bookings. Expansions included StackPath, a leading provider of edge cloud security services deploying infrastructure across 21 metros. The enterprise vertical continues to be our fastest-growing segment, led by energy, healthcare and retail sub-segments, as digital transformation forces firms to change how they interconnect users and clouds across multiple locations. Equinix has now captured 48% of the Fortune 500, and one-third of the Forbes Global 2000 companies.

Business Outlook

Equinix adopted FASB Accounting Standard Codification Topic 842, Leases ("ASC 842") effective January 1, 2019. The expected impact of adoption is included in the provided guidance.

For the first quarter of 2019, Equinix expects revenues to range between $1.342 and $1.352 billion, an increase of 3% quarter-over-quarter at the midpoint, on an as-reported basis, and 2% on a normalized and constant currency basis, the largest ever quarterly step-up in recurring revenues. This guidance includes a positive foreign currency benefit of $8 million when compared to the average FX rates in Q4 2018. Adjusted EBITDA is expected to range between $624 and $634 million, which includes a $4 million positive foreign currency benefit when compared to the average FX rates in Q4 2018. Adjusted EBITDA includes $15 million of Q1 seasonal costs, a negative $4 million impact from the adoption of ASC 842, and $5 million of integration costs related to prior acquisitions. Recurring capital expenditures are expected to range between $20 and $30 million.

For the full year of 2019, total revenues are expected to range between $5.520 and $5.570 billion, a 9 - 10% increase over the previous year or a normalized and constant currency increase of 8 - 9%. This guidance includes a positive foreign currency benefit of $10 million when compared to prior Equinix guidance rates. Adjusted EBITDA is expected to range between $2.605 and $2.655 billion, an adjusted EBITDA margin of 47%. This adjusted EBITDA includes a foreign currency benefit of $3 million when compared to prior Equinix guidance rates, a negative $15 million impact from the adoption of ASC 842, $15 million in integration costs related to prior acquisitions, higher EMEA utilities expense and record levels of expansion activities. AFFO is expected to range between $1.825 and $1.875 billion, an increase of 10 - 13% year-over-year on both an as-reported and a normalized and constant currency basis. This AFFO guidance includes a foreign currency benefit of $5 million when compared to prior Equinix guidance rates, $15 million in integration costs related to prior acquisitions, and assumes an immaterial impact from the adoption of ASC 842. Non-recurring capital expenditures are expected to range between $1.725 and $1.915 billion and recurring capital expenditures are expected to range between $175 and $185 million.

The U.S. dollar exchange rates used for 2019 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.16 to the Euro, $1.32 to the Pound, ¥110 to the U.S. dollar, S$1.36 to the U.S. dollar, and R$3.88 to the U.S. dollar. The Q4 2018 global revenue breakdown by currency for the Euro, British Pound, Japanese Yen, Singapore Dollar and Brazilian Real is 19%, 9%, 6%, 6% and 3%, 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.

Q4 2018 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended December 31, 2018, along with its future outlook, in its quarterly conference call on Wednesday, February 13, 2019, 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, May 1, 2019, by dialing 1-203-369-0224 and entering passcode (2019). In addition, the webcast will be available on the company's website 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. In 52 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies.

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 or loss from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, acquisition 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, acquisition 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 acquisition costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The acquisition costs relate to costs Equinix incurs in connection with business combinations. 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 acquisitions. Management believes items such as restructuring charges, impairment charges, acquisition 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"), which are non-GAAP financial measures commonly used in the REIT industry. 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, acquisition 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 acquisition 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, 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 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


Twelve Months Ended


December 31,
2018


September 30,
2018


December 31,
2017


December 31,
2018


December 31,
2017

Recurring revenues

$

1,230,318



$

1,207,806



$

1,122,599



$

4,776,502



$

4,120,120


Non-recurring revenues

79,765



75,945



77,622



295,152



248,308


Revenues

1,310,083



1,283,751



1,200,221



5,071,654



4,368,428


Cost of revenues

670,935



660,309



619,625



2,605,475



2,193,149


Gross profit

639,148



623,442



580,596



2,466,179



2,175,279


Operating expenses:










Sales and marketing

161,804



157,920



153,612



633,702



581,724


General and administrative

206,146



206,902



187,816



826,694



745,906


Acquisition costs

481



(1,120)



7,125



34,413



38,635


Gain on asset sales



(6,013)





(6,013)




Total operating expenses

368,431



357,689



348,553



1,488,796



1,366,265


Income from operations

270,717



265,753



232,043



977,383



809,014


Interest and other income (expense):










Interest income

3,002



2,912



3,255



14,482



13,075


Interest expense

(129,978)



(130,566)



(126,144)



(521,494)



(478,698)


Other income

4,498



3,744



8,668



14,044



9,213


Gain (loss) on debt extinguishment

(12,163)



1,492



(23,669)



(51,377)



(65,772)


Total interest and other, net

(134,641)



(122,418)



(137,890)



(544,345)



(522,182)


Income before income taxes

136,076



143,335



94,153



433,038



286,832


Income tax expense

(26,054)



(18,510)



(28,938)



(67,679)



(53,850)


Net income

$

110,022



$

124,825



$

65,215



$

365,359



$

232,982


Net income per share:










Basic net income per share

$

1.37



$

1.56



$

0.83



$

4.58



$

3.03


Diluted net income per share

$

1.36



$

1.55



$

0.82



$

4.56



$

3.00


Shares used in computing basic net income per share

80,509



79,872



78,543



79,779



76,854


Shares used in computing diluted net income per share

80,740



80,283



79,128



80,197



77,535












 

EQUINIX, INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



Three Months Ended


Twelve Months Ended


December 31,
2018


September 30,
2018


December 31,
2017


December 31,
2018


December 31,
2017

Net income

$

110,022



$

124,825



$

65,215



$

365,359



$

232,982


Other comprehensive income (loss), net of tax:










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

(68,795)



(77,566)



45,439



(421,743)



454,269


Unrealized gain on available-for-sale securities





99





14


Unrealized gain (loss) on cash flow hedges

6,287



6,184



(2,427)



43,671



(54,895)


Net investment hedge CTA gain (loss)

38,934



27,214



(44,171)



219,628



(235,292)


Net actuarial gain (loss) on defined benefit plans

20



14



(182)



55



(143)


Total other comprehensive income (loss), net of tax

(23,554)



(44,154)



(1,242)



(158,389)



163,953


Comprehensive income, net of tax

$

86,468



$

80,671



$

63,973



$

206,970



$

396,935


 

EQUINIX, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



December 31,
2018


December 31,
2017

Assets




Cash and cash equivalents

$

606,166



$

1,412,517


Short-term investments

4,540



28,271


Accounts receivable, net

630,119



576,313


Other current assets

274,857



232,027


Total current assets

1,515,682



2,249,128


Long-term investments



9,243


Property, plant and equipment, net

11,026,020



9,394,602


Goodwill

4,836,388



4,411,762


Intangible assets, net

2,333,296



2,384,972


Other assets

533,252



241,750


Total assets

$

20,244,638



$

18,691,457


Liabilities and Stockholders' Equity




Accounts payable and accrued expenses

$

756,692



$

719,257


Accrued property, plant and equipment

179,412



220,367


Current portion of capital lease and other financing obligations

77,844



78,705


Current portion of mortgage and loans payable

73,129



64,491


Current portion of senior notes

300,999




Other current liabilities

126,995



159,914


Total current liabilities

1,515,071



1,242,734


Capital lease and other financing obligations, less current portion

1,441,077



1,620,256


Mortgage and loans payable, less current portion

1,310,663



1,393,118


Senior notes, less current portion

8,128,785



6,923,849


Other liabilities

629,763



661,710


Total liabilities

13,025,359



11,841,667


Common stock

81



79


Additional paid-in capital

10,751,313



10,121,323


Treasury stock

(145,161)



(146,320)


Accumulated dividends

(3,331,200)



(2,592,792)


Accumulated other comprehensive loss

(945,702)



(785,189)


Retained earnings

889,948



252,689


Total stockholders' equity

7,219,279



6,849,790


Total liabilities and stockholders' equity

$

20,244,638



$

18,691,457










Ending headcount by geographic region is as follows:








Americas headcount

3,480



3,154


EMEA headcount

2,751



2,560


Asia-Pacific headcount

1,672



1,559


Total headcount

7,903



7,273


 

EQUINIX, INC.

Summary of Debt Principal Outstanding

(in thousands)

(unaudited)



December 31, 2018


December 31, 2017





Capital lease and other financing obligations

$

1,518,921



$

1,698,961






Term loans

1,337,868



1,406,686


Mortgage payable and other loans payable

45,924



50,923


Plus: debt discount and issuance costs, net

4,732



8,615


Total mortgage and loans payable principal

1,388,524



1,466,224






Senior notes

8,429,784



6,923,849


Plus: debt issuance costs

75,372



78,151


Less: debt premium

(5,031)




Total senior notes principal

8,500,125



7,002,000






Total debt principal outstanding

$

11,407,570



$

10,167,185


 

EQUINIX, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)




Three Months Ended


Twelve Months Ended



December 31,
2018


September 30,
2018


December 31,
2017


December 31,
2018


December 31,
2017












Cash flows from operating activities:








Net income

$

110,022



$

124,825



$

65,215



$

365,359



$

232,982



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


Depreciation, amortization and accretion

305,130



306,318



279,774



1,226,741



1,028,892



Stock-based compensation

40,867



47,588



45,898



180,716



175,500



Amortization of debt issuance costs and debt discounts and premiums

3,009



3,148



4,349



13,618



24,449



(Gain) loss on debt extinguishment

12,163



(1,492)



23,669



51,377



65,772



Gain on asset sales



(6,013)





(6,013)





Other items

10,704



5,730



(3,439)



27,644



7,972



Changes in operating assets and liabilities:








Accounts receivable

32,195



(46,685)



40,656



(52,931)



(161,774)



Income taxes, net

22,206



(10,010)



18,672



(10,670)



(34,936)



Accounts payable and accrued expenses

30,713



29,107



29,536



35,495



74,488



Other assets and liabilities

(8,380)



(35,354)



(9,451)



(15,910)



25,888


Net cash provided by operating activities

558,629



417,162



494,879



1,815,426



1,439,233


Cash flows from investing activities:






Purchases, sales and maturities of investments, net

1,402



6,452



13,554



20,597



(11,505)



Business acquisitions, net of cash and restricted cash acquired

(502)



1,808



(334,754)



(829,687)



(3,963,280)



Purchases of real estate

(45,806)



(94,830)



(30,119)



(182,418)



(95,083)



Purchases of other property, plant and equipment

(680,665)



(545,541)



(432,677)



(2,096,174)



(1,378,725)



Proceeds from asset sales



12,154





12,154



47,767


Net cash used in investing activities

(725,571)



(619,957)



(783,996)



(3,075,528)



(5,400,826)


Cash flows from financing activities:








Proceeds from employee equity awards

33



24,243



71



50,136



41,696



Payment of dividend distributions

(183,858)



(185,983)



(157,583)



(738,600)



(621,497)



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

114,299



265,671



355,080



388,172



2,481,421



Proceeds from loans payable



424,650



997,076



424,650



2,056,876



Proceeds from senior notes





1,179,001



929,850



3,628,701



Repayment of capital lease and other financing obligations

(14,119)



(19,799)



(33,218)



(103,774)



(93,470)



Repayment of mortgage and loans payable

(17,975)



(404,083)



(2,214,278)



(447,473)



(2,277,798)



Repayment of senior notes









(500,000)



Debt extinguishment costs





(3,102)



(20,556)



(26,122)



Debt issuance costs



(635)



(24,161)



(12,218)



(81,047)



Other financing activities

725







725



(900)


Net cash provided by (used in) financing activities

(100,895)



104,064



98,886



470,912



4,607,860


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

(2,963)



(5,104)



4,737



(33,907)



31,187


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

(270,800)



(103,835)



(185,494)



(823,097)



677,454


Cash, cash equivalents and restricted cash at beginning of period

898,404



1,002,239



1,636,195



1,450,701



773,247


Cash, cash equivalents and restricted cash at end of period

$

627,604



$

898,404



$

1,450,701



$

627,604



$

1,450,701


Supplemental cash flow information:







Cash paid for taxes

$

15,727



$

28,206



$

10,230



$

93,375



$

72,641


Cash paid for interest

$

121,779



$

152,887



$

102,385



$

496,794



$

444,793













Negative free cash flow (1)

$

(168,344)



$

(209,247)



$

(302,671)



$

(1,280,699)



$

(3,950,088)













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

$

(122,036)



$

(116,225)



$

62,202



$

(268,594)



$

108,275
























(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

$

558,629



$

417,162



$

494,879



$

1,815,426



$

1,439,233



Net cash used in investing activities as presented above

(725,571)



(619,957)



(783,996)



(3,075,528)



(5,400,826)



Purchases, sales and maturities of investments, net

(1,402)



(6,452)



(13,554)



(20,597)



11,505



Negative free cash flow

$

(168,344)



$

(209,247)



$

(302,671)



$

(1,280,699)



$

(3,950,088)
























(2)

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


Negative free cash flow (as defined above)

$

(168,344)



$

(209,247)



$

(302,671)



$

(1,280,699)



$

(3,950,088)



Less business acquisitions, net of cash and restricted cash acquired

502



(1,808)



334,754



829,687



3,963,280



Less purchases of real estate

45,806



94,830



30,119



182,418



95,083



Adjusted free cash flow (adjusted negative free cash flow)

$

(122,036)



$

(116,225)



$

62,202



$

(268,594)



$

108,275













 

EQUINIX, INC.

Non-GAAP Measures and Other Supplemental Data

(in thousands)

(unaudited)




Three Months Ended


Twelve Months Ended



December 31,
2018


September 30,
2018


December 31,
2017


December 31,
2018


December 31,
2017


Recurring revenues

$

1,230,318



$

1,207,806



$

1,122,599



$

4,776,502



$

4,120,120



Non-recurring revenues

79,765



75,945



77,622



295,152



248,308



Revenues (1)

1,310,083



1,283,751



1,200,221



5,071,654



4,368,428














Cash cost of revenues (2)

445,995



433,186



407,389



1,696,436



1,433,165



Cash gross profit (3)

864,088



850,565



792,832



3,375,218



2,935,263














Cash operating expenses (4)(7):










Cash sales and marketing expenses (5)

99,613



93,339



94,273



382,489



380,623



Cash general and administrative

    expenses (6)

147,280



144,700



133,719



579,489



502,599



Total cash operating expenses   (4)(7)

246,893



238,039



227,992



961,978



883,222














Adjusted EBITDA (8)

$

617,195



$

612,526



$

564,840



$

2,413,240



$

2,052,041














Cash gross margins (9)

66

%


66

%


66

%


67

%


67

%













Adjusted EBITDA

    margins (10)

47

%


48

%


47

%


48

%


47

%













Adjusted EBITDA flow-through rate (11)

18

%


39

%


30

%


51

%


52

%













FFO (12)

$

332,810



$

340,030



$

285,618



$

1,253,120



$

992,363














AFFO (13) (14)

$

414,145



$

402,250



$

381,527



$

1,659,097



$

1,437,040
























(1)

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

















Americas Revenues:






















Colocation

$

438,150



$

433,828



$

422,648



$

1,732,998



$

1,518,929



Interconnection

137,031



134,159



127,793



532,163



469,268



Managed infrastructure

20,070



18,698



18,512



75,595



68,937



Other

5,350



5,161



1,340



16,570



5,218



Recurring revenues

600,601



591,846



570,293



2,357,326



2,062,352



Non-recurring revenues

37,547



33,838



35,874



127,408



110,408



Revenues

$

638,148



$

625,684



$

606,167



$

2,484,734



$

2,172,760

























EMEA Revenues:






















Colocation

$

315,118



$

305,072



$

282,240



$

1,201,769



$

1,063,543



Interconnection

35,288



34,640



31,311



138,874



104,891



Managed infrastructure

29,881



28,387



28,780



118,685



88,122



Other

1,482



2,552



2,573



8,164



10,415



Recurring revenues

381,769



370,651



344,904



1,467,492



1,266,971



Non-recurring revenues

21,315



26,104



24,728



95,145



79,285



Revenues

$

403,084



$

396,755



$

369,632



$

1,562,637



$

1,346,256














Asia-Pacific Revenues:






















Colocation

$

191,891



$

191,143



$

156,824



$

735,404



$

595,673



Interconnection

34,917



33,318



28,781



130,928



107,014



Managed infrastructure

21,140



20,848



21,797



85,352



88,110



Recurring revenues

247,948



245,309



207,402



951,684



790,797



Non-recurring revenues

20,903



16,003



17,020



72,599



58,615



Revenues

$

268,851



$

261,312



$

224,422



$

1,024,283



$

849,412














Worldwide Revenues:






















Colocation

$

945,159



$

930,043



$

861,712



$

3,670,171



$

3,178,145



Interconnection

207,236



202,117



187,885



801,965



681,173



Managed infrastructure

71,091



67,933



69,089



279,632



245,169



Other

6,832



7,713



3,913



24,734



15,633



Recurring revenues

1,230,318



1,207,806



1,122,599



4,776,502



4,120,120



Non-recurring revenues

79,765



75,945



77,622



295,152



248,308



Revenues

$

1,310,083



$

1,283,751



$

1,200,221



$

5,071,654



$

4,368,428
























(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

$

670,935



$

660,309



$

619,625



$

2,605,475



$

2,193,149



Depreciation, amortization and accretion expense

(219,799)



(222,523)



(208,615)



(890,792)



(746,363)



Stock-based compensation expense

(5,141)



(4,600)



(3,621)



(18,247)



(13,621)



Cash cost of revenues

$

445,995



$

433,186



$

407,389



$

1,696,436



$

1,433,165














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

















Americas cash cost of revenues

$

184,545



$

181,826



$

179,884



$

710,683



$

610,433



EMEA cash cost of revenues

161,781



160,173



148,721



629,853



528,518



Asia-Pacific cash cost of revenues

99,669



91,187



78,784



355,900



294,214



Cash cost of revenues

$

445,995



$

433,186



$

407,389



$

1,696,436



$

1,433,165







(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

$

367,950



$

364,822



$

341,428



$

1,460,396



$

1,327,630



Depreciation and amortization expense

(85,331)



(83,795)



(71,159)



(335,949)



(282,529)



Stock-based compensation expense

(35,726)



(42,988)



(42,277)



(162,469)



(161,879)



Cash operating expense

$

246,893



$

238,039



$

227,992



$

961,978



$

883,222













(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

$

161,804



$

157,920



$

153,612



$

633,702



$

581,724



Depreciation and amortization expense

(48,723)



(50,415)



(47,490)



(197,765)



(151,007)



Stock-based compensation expense

(13,468)



(14,166)



(11,849)



(53,448)



(50,094)



Cash sales and marketing expense

$

99,613



$

93,339



$

94,273



$

382,489



$

380,623



































(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

$

206,146



$

206,902



$

187,816



$

826,694



$

745,906



Depreciation and amortization expense

(36,608)



(33,380)



(23,669)



(138,184)



(131,522)



Stock-based compensation expense

(22,258)



(28,822)



(30,428)



(109,021)



(111,785)



Cash general and administrative expense

$

147,280



$

144,700



$

133,719



$

579,489



$

502,599













(7)

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













Americas cash SG&A

$

151,279



$

147,855



$

140,460



$

590,220



$

527,633



EMEA cash SG&A

59,813



56,785



55,854



234,504



235,041



Asia-Pacific cash SG&A

35,801



33,399



31,678



137,254



120,548



Cash SG&A

$

246,893



$

238,039



$

227,992



$

961,978



$

883,222













(8)

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













Income from operations

$

270,717



$

265,753



$

232,043



$

977,383



$

809,014



Depreciation, amortization and accretion expense

305,130



306,318



279,774



1,226,741



1,028,892



Stock-based compensation expense

40,867



47,588



45,898



180,716



175,500



Acquisition costs

481



(1,120)



7,125



34,413



38,635



Gain on asset sales



(6,013)





(6,013)





Adjusted EBITDA

$

617,195



$

612,526



$

564,840



$

2,413,240



$

2,052,041

























The geographic split of our adjusted EBITDA is presented below:

















Americas income from operations

$

116,627



$

106,536



$

101,286



$

412,610



$

363,220



Americas depreciation, amortization and accretion expense

159,762



156,920



149,970



635,045



514,968



Americas stock-based compensation expense

25,662



32,818



33,455



123,461



128,419



Americas acquisition costs

273



(271)



1,112



12,715



28,087



Americas adjusted EBITDA

$

302,324



$

296,003



$

285,823



$

1,183,831



$

1,034,694














EMEA income from operations

$

86,184



$

88,830



$

73,749



$

312,163



$

237,854



EMEA depreciation, amortization and accretion expense

85,731



89,190



79,741



356,241



309,290



EMEA stock-based compensation expense

8,779



8,532



6,874



32,853



26,325



EMEA acquisition costs

796



(742)



4,693



3,036



9,228



EMEA gain on asset sales



(6,013)





(6,013)





EMEA adjusted EBITDA

$

181,490



$

179,797



$

165,057



$

698,280