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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549 

 

FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 27, 2022 

 

EQUINIX, INC.

(Exact Name of Registrant as Specified in Charter) 

 

Delaware

 

001-40205

 

77-0487526

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

One Lagoon Drive

Redwood City, CA 94065

(Address of Principal Executive Offices, and Zip Code)

 

(650) 598-6000

Registrant’s Telephone Number, Including Area Code

 

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001

 

EQIX

 

The NASDAQ Stock Market LLC

0.250% Senior Notes due 2027

 

 

 

The NASDAQ Stock Market LLC

1.000% Senior Notes due 2033

 

 

 

The NASDAQ Stock Market LLC

 

 

 


 

 

 

Item 2.02. Results of Operations and Financial Condition

 

On July 27, 2022, Equinix, Inc. (“Equinix”) issued a press release and will hold a conference call regarding its financial results for the second quarter ended June 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Equinix is making reference to certain non-GAAP financial information in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

Item 9.01. Financial Statements and Exhibits

(d)

Exhibits.

 

99.1

Press Release of Equinix, Inc. dated July 27, 2022.

 

 

104

Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document

 

 


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

EQUINIX, INC.

 

 

 

 

 

 

DATE: July 27, 2022

By:

/s/ KEITH D. TAYLOR

 

 

Keith D. Taylor

 

 

Chief Financial Officer

 

 

 

 

 

Exhibit 99.1

Equinix Reports Second Quarter 2022 Results



Record Growth as Businesses Continue to Prioritize Digital Infrastructure Despite Macroeconomic Conditions

REDWOOD CITY, Calif., July 27, 2022 /PRNewswire/ --

  • Quarterly revenues increased 10% on both an as-reported and normalized and constant currency basis over the same quarter last year to $1.8 billion, representing the company's 78th consecutive quarter of revenue growth—the longest streak of any S&P 500 company
  • Delivered record quarterly gross and net bookings led by the Americas and EMEA regions— sizably surpassing the prior peak
  • Achieved record channel bookings in Q2, accounting for more than 35% of total bookings
  • Exceeded 435,000 interconnections in Q2, highlighting the company's critical role in the digital infrastructure of today's businesses

Equinix, Inc. (Nasdaq: EQIX), the world's digital infrastructure companyTM, today reported results for the quarter ended June 30, 2022. 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 2022 Results Summary

  • Revenues
    • $1.8 billion, a 5% increase over the previous quarter
    • Includes a negative $20 million foreign currency impact when compared to prior guidance rates
  • Operating Income
    • $318 million, a 19% increase over the previous quarter and an operating margin of 17%
  • Net Income and Net Income per Share attributable to Equinix
    • $216 million, a 47% increase over the previous quarter, primarily due to strong operating performance and a favorable tax settlement
    • $2.37 per share, a 46% increase over the previous quarter
  • Adjusted EBITDA
    • $860 million, an 8% increase over the previous quarter and an adjusted EBITDA margin of 47%
    • Includes a negative $10 million foreign currency impact when compared to prior guidance rates
    • Includes $4 million of integration costs
  • AFFO and AFFO per Share
    • $691 million, a 6% increase over the previous quarter, primarily due to strong operating performance, partially offset by higher taxes due to increased profitability
    • $7.58 per share, a 6% increase over the previous quarter
    • Includes $4 million of integration costs

2022 Annual Guidance Summary

  • Revenues
    • $7.259 - $7.299 billion, an increase of 9 - 10% over the previous year, or a normalized and constant currency increase of 10 - 11%
    • An increase of $65 million compared to prior guidance, offset by a $102 million foreign currency impact compared to prior guidance rates
  • Adjusted EBITDA
    • $3.323 - $3.353 billion, a 46% adjusted EBITDA margin
    • An increase of $33 million compared to prior guidance excluding integration costs, offset by a $49 million foreign currency impact compared to prior guidance rates
    • Assumes $30 million of integration costs
  • AFFO and AFFO per Share
    • $2.636 - $2.666 billion, an increase of 8 - 9% over the previous year, or a normalized and constant currency increase of 8 - 10%
    • An increase of $33 million compared to prior guidance, offset by a $42 million foreign currency impact compared to prior guidance rates
    • $28.77 - $29.10 per share, an increase of 6 - 7% over the previous year, or 8 - 9% on a normalized and constant currency basis
    • Assumes $30 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:

"With record Q2 gross bookings that sizably surpassed the prior peak, Equinix had an outstanding first half of 2022, and our business continued to deliver strong and consistent results. The demand environment and our pipeline remain robust despite a complex global macroeconomic and political landscape, as we continue to enable digital leaders on their transformation journey."

Business Highlights

  • As customers continue to embrace Equinix as the best manifestation of the interconnected digital edge, the company continues to invest in the expansion of its global platform:
    • 49 major projects are currently underway across 34 metros in 21 countries, including new data center builds in Dublin, Montréal, New York, Paris, Warsaw and the company's first build in Chennai, India.
    • In May, Equinix closed the acquisition of four data centers from Empresa Nacional De Telecomunicaciones S.A. ("Entel"), a leading Chilean telecommunications provider (the "Entel Chile Acquisition"), extending Platform Equinix® into Chile and bringing its global footprint to 70 metros across 31 countries.
    • Equinix expects to close on the acquisition of one additional data center from Entel to enter Lima, Peru, in Q3.
  • Equinix continued to strengthen its leadership position in the cloud ecosystem through the company's xScaleTM program, which experienced strong leasing activity from top hyperscalers in Q2. The xScale portfolio has now leased more than 170 megawatts globally, with 11 xScale builds currently under development, of which more than 80% is pre-leased.
  • Equinix's Future First sustainability strategy was recently recognized by Sustainalytics as among the best large-cap REITs for ESG. Equinix was also ranked seventh on the U.S. Environmental Protection Agency's National Top 100 list of the largest green power users.
  • Equinix continued the growth of its indirect selling initiatives, with channel sales delivering a fifth consecutive quarter of record bookings, accounting for over 35% of Q2 bookings and nearly 60% of new logos in the quarter. Wins were across a wide range of industry verticals and use cases, with continued strength from strategic partners including AT&T, Cisco, Dell, Google, Microsoft and Orange Business Services. In Q2, Equinix was recognized as HPE GreenLake's Momentum Partner of the Year for 2022 as the two companies work together to deliver a consistent hybrid multicloud experience for joint customers.

Business Outlook

For the third quarter of 2022, the Company expects revenues to range between $1.827 and $1.847 billion, a 1 - 2% increase over the prior quarter on both an as-reported and normalized and constant currency basis. This guidance includes a negative $12 million foreign currency impact when compared to the average FX rates in Q2 2022. Adjusted EBITDA is expected to range between $831 and $851 million. Adjusted EBITDA includes a negative $5 million foreign currency impact when compared to the average FX rates in Q2 2022 and $9 million of integration costs from acquisitions. Recurring capital expenditures are expected to range between $42 and $52 million.

For the full year of 2022, total revenues are expected to range between $7.259 and $7.299 billion, a 9 - 10% increase over the previous year, or a normalized and constant currency increase of 10 - 11%. This updated full-year guidance includes an underlying raise of $35 million from better-than-expected business performance, $30 million from the Entel Chile Acquisition and a negative $102 million foreign currency impact when compared to the prior guidance rates. Adjusted EBITDA is expected to range between $3.323 and $3.353 billion, an adjusted EBITDA margin of 46%. This updated full-year guidance includes an underlying raise of $25 million from better-than-expected business performance excluding integration costs, $18 million from the Entel Chile Acquisition, offset by $10 million due to a lease accounting classification change and a negative $49 million foreign currency impact when compared to the prior guidance rates. For the year, the Company now expects to incur $30 million in integration costs related to acquisitions. AFFO is expected to range between $2.636 and $2.666 billion, an increase of 8 - 9% over the previous year, or a normalized and constant currency increase of 8 - 10%. This updated AFFO guidance excluding integration costs includes an underlying raise of $17 million, a $3 million net benefit due to a lease accounting classification change, $13 million from the Entel Chile Acquisition and a negative $42 million foreign currency impact when compared to the prior guidance rates. AFFO per share is expected to range between $28.77 and $29.10, an increase of 6 - 7% over the previous year on an as-reported basis, or 8 - 9% on a normalized and constant currency basis. Total capital expenditures are expected to range between $2.313 and $2.563 billion. Non-recurring capital expenditures, including xScale-related capital expenditures, are expected to range between $2.133 and $2.373 billion, and recurring capital expenditures are expected to range between $180 and $190 million. xScale-related on-balance sheet capital expenditures are expected to range between $85 and $135 million, which we anticipate will be reimbursed to Equinix from both the current and future xScale JVs.

The U.S. dollar exchange rates used for 2022 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.14 to the Euro, $1.31 to the Pound, S$1.39 to the U.S. Dollar, ¥136 to the U.S. Dollar, A$1.45 to the U.S. Dollar, HK$7.85 to the U.S. Dollar, R$5.20 to the U.S. Dollar and C$1.29 to the U.S. Dollar. The Q2 2022 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen, Australian Dollar, Hong Kong Dollar, Brazilian Real and Canadian Dollar is 19%, 9%, 8%, 6%, 4%, 3%, 3% 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.

Q2 2022 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended June 30, 2022, along with its future outlook, in its quarterly conference call on Wednesday, July 27, 2022, 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, October 26, 2022, by dialing 1-866-363-4001 and referencing the passcode 2022. 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

  • Equinix Investor Relations Resources

About Equinix

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

Non-GAAP Financial Measures

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

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

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

In presenting non-GAAP financial measures, such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), adjusted EBITDA margins, free cash flow and adjusted free cash flow, Equinix excludes certain items that it believes are not good indicators of Equinix's current or future operating performance. These items are depreciation, amortization, accretion of asset retirement obligations and accrued restructuring charges, stock-based compensation, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales. Equinix excludes these items in order for its lenders, investors and the industry analysts who review and report on Equinix to better evaluate Equinix's operating performance and cash spending levels relative to its industry sector and competitors.

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

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

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

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

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

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

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

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, risks to our business and operating results related to the COVID-19 pandemic; the current inflationary environment; foreign currency exchange rate fluctuations; increased costs to procure power and the general volatility in the global energy market; the challenges of acquiring, operating and constructing IBX and xScale data centers and developing, deploying and delivering Equinix products and solutions; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenues from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; risks related to our taxation as a REIT and other risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent and upcoming Equinix quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.


EQUINIX, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



Three Months Ended


Six Months Ended


June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Recurring revenues

$ 1,707,451


$   1,642,324


$ 1,542,462


$ 3,349,775


$ 3,053,395

Non-recurring revenues

109,703


92,123


115,457


201,826


200,588

Revenues

1,817,154


1,734,447


1,657,919


3,551,601


3,253,983

Cost of revenues

930,257


915,875


865,120


1,846,132


1,676,337

Gross profit

886,897


818,572


792,799


1,705,469


1,577,646

Operating expenses:










Sales and marketing

193,727


192,511


185,610


386,238


368,437

General and administrative

370,348


352,687


322,005


723,035


623,461

Transaction costs

5,063


4,240


6,985


9,303


8,167

(Gain) loss on asset sales

(94)


1,818


(455)


1,724


1,265

Total operating expenses

569,044


551,256


514,145


1,120,300


1,001,330

Income from operations

317,853


267,316


278,654


585,169


576,316

Interest and other income (expense):









Interest income

4,508


2,106


374


6,614


1,103

Interest expense

(90,826)


(79,965)


(87,231)


(170,791)


(176,912)

Other expense

(6,238)


(9,549)


(39,377)


(15,787)


(46,327)

Gain (loss) on debt extinguishment

(420)


529


(102,460)


109


(115,518)

Total interest and other, net

(92,976)


(86,879)


(228,694)


(179,855)


(337,654)

Income before income taxes

224,877


180,437


49,960


405,314


238,662

Income tax expense

(8,635)


(32,744)


18,527


(41,379)


(14,101)

Net income

216,242


147,693


68,487


363,935


224,561

Net (income) loss attributable to non-controlling interests

80


(240)


(148)


(160)


140

Net income attributable to Equinix

$     216,322


$      147,453


$       68,339


$     363,775


$     224,701

Net income per share attributable to Equinix:

Basic net income per share

$           2.38


$             1.62


$           0.76


$           4.00


$           2.51

Diluted net income per share

$           2.37


$             1.62


$           0.76


$           3.99


$           2.50

Shares used in computing basic net income per share

91,036


90,771


89,648


90,904


89,490

Shares used in computing diluted net income per share

91,262


91,162


90,104


91,213


90,024

EQUINIX, INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



Three Months Ended


Six Months Ended


June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Net income

$     216,242


$     147,693


$       68,487


$     363,935


$     224,561

Other comprehensive income (loss), net of tax:







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

(740,428)


(122,534)


110,466


(862,962)


(184,680)

Net investment hedge CTA gain (loss)

353,953


91,358


(37,036)


445,311


133,139

Unrealized gain (loss) on cash flow hedges

20,617


64,037


(5,700)


84,654


23,778

Net actuarial gain (loss) on defined benefit plans

(19)


(21)


15


(40)


27

Total other comprehensive income (loss), net of tax

(365,877)


32,840


67,745


(333,037)


(27,736)

Comprehensive income (loss), net of tax

(149,635)


180,533


136,232


30,898


196,825

Net (income) loss attributable to non-controlling interests

80


(240)


(148)


(160)


140

Other comprehensive (income) attributable to non-controlling interests

35


(3)


(11)


32


(10)

Comprehensive income (loss) attributable to Equinix

$   (149,520)


$     180,290


$     136,073


$       30,770


$     196,955

EQUINIX, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



June 30, 2022


December 31, 2021

Assets




Cash and cash equivalents

$                  1,891,311


$              1,536,358

Accounts receivable, net

812,769


681,809

Other current assets

514,313


462,739

Assets held for sale

71,554


276,195

          Total current assets

3,289,947


2,957,101

Property, plant and equipment, net

15,455,180


15,445,775

Operating lease right-of-use assets

1,453,233


1,282,418

Goodwill

5,585,330


5,372,071

Intangible assets, net

1,982,434


1,935,267

Other assets

1,272,090


926,066

          Total assets

$                29,038,214


$            27,918,698

Liabilities and Stockholders' Equity




Accounts payable and accrued expenses

$                     841,473


$                 879,144

Accrued property, plant and equipment

244,267


187,334

Current portion of operating lease liabilities

140,667


144,029

Current portion of finance lease liabilities

144,100


147,841

Current portion of mortgage and loans payable

34,086


33,087

Other current liabilities

204,351


214,519

          Total current liabilities

1,608,944


1,605,954

Operating lease liabilities, less current portion

1,291,447


1,107,180

Finance lease liabilities, less current portion

1,985,498


1,989,668

Mortgage and loans payable, less current portion

655,331


586,577

Senior notes, less current portion

12,077,756


10,984,144

Other liabilities

789,644


763,411

          Total liabilities

18,408,620


17,036,934

Common stock

91


91

Additional paid-in capital

16,259,311


15,984,597

Treasury stock

(98,792)


(112,208)

Accumulated dividends

(6,736,338)


(6,165,140)

Accumulated other comprehensive loss

(1,418,756)


(1,085,751)

Retained earnings

2,624,268


2,260,493

          Total Equinix stockholders' equity

10,629,784


10,882,082

Non-controlling interests

(190)


(318)

          Total stockholders' equity

10,629,594


10,881,764

                Total liabilities and stockholders' equity

$                29,038,214


$            27,918,698





Ending headcount by geographic region is as follows:




          Americas headcount

5,275


5,056

          EMEA headcount

3,728


3,611

          Asia-Pacific headcount

2,448


2,277

                    Total headcount

11,451


10,944

EQUINIX, INC.

Summary of Debt Principal Outstanding

(in thousands)

(unaudited)



June 30, 2022


December 31, 2021





Finance lease liabilities

$                 2,129,598


$                 2,137,509





Term loans

626,417


549,343

Mortgage payable and other loans payable

63,000


70,321

Minus: mortgage premium, debt discount and issuance costs, net

(208)


(1,276)

           Total mortgage and loans payable principal

689,209


618,388





Senior notes

12,077,756


10,984,144

Plus: debt discount and issuance costs

125,154


117,986

          Total senior notes principal

12,202,910


11,102,130





Total debt principal outstanding

$              15,021,717


$              13,858,027

EQUINIX, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)




Three Months Ended


Six Months Ended



June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021












Cash flows from operating activities:


Net income

$    216,242


$    147,693


$      68,487


$    363,935


$    224,561


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


Depreciation, amortization and accretion

432,828


436,386


417,758


869,214


812,076


Stock-based compensation

104,682


89,952


94,335


194,634


172,685


Amortization of debt issuance costs and debt discounts and premiums

4,536


4,204


4,430


8,740


8,370


(Gain) loss on debt extinguishment

420


(529)


102,460


(109)


115,518


Loss (gain) on asset sales

(94)


1,818


(455)


1,724


1,265


Other items

5,832


6,050


11,296


11,882


22,478


Changes in operating assets and liabilities:


Accounts receivable

(26,302)


(100,727)


(39,709)


(127,029)


(57,329)


Income taxes, net

(33,663)


13,881


(55,661)


(19,782)


(65,935)


Accounts payable and accrued expenses

55,128


(75,980)


19,161


(20,852)


(57,201)


Operating lease right-of-use assets

38,839


35,400


20,851


74,239


61,775


Operating lease liabilities

(34,632)


(31,740)


(63,765)


(66,372)


(100,328)


Other assets and liabilities

37,765


54,715


20,009


92,480


(147,580)

Net cash provided by operating activities

801,581


581,123


599,197


1,382,704


990,355

Cash flows from investing activities:


Purchases, sales and maturities of investments, net

(26,391)


(38,558)


(2,595)


(64,949)


(20,944)


Business acquisitions, net of cash and restricted cash acquired

(883,668)




(883,668)



Real estate acquisitions

(30,257)


(3,074)


(33,900)


(33,331)


(87,637)


Purchases of other property, plant and equipment

(484,830)


(412,518)


(692,232)


(897,348)


(1,255,830)


Proceeds from asset sales

56,024


195,391



251,415


Net cash used in investing activities

(1,369,122)


(258,759)


(728,727)


(1,627,881)


(1,364,411)

Cash flows from financing activities:


Proceeds from employee equity awards


43,876



43,876


40,034


Payment of dividend distributions

(283,048)


(289,669)


(258,053)


(572,717)


(521,092)


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



99,599



99,599


Proceeds from mortgage and loans payable


676,850



676,850



Proceeds from senior notes, net of debt discounts

1,193,688



2,587,910


1,193,688


3,878,662


Repayment of finance lease liabilities

(28,783)


(40,773)


(66,293)


(69,556)


(98,877)


Repayment of mortgage and loans payable

(9,199)


(551,833)


(675,873)


(561,032)


(696,059)


Repayment of senior notes



(1,400,000)



(1,990,650)


Debt extinguishment costs



(90,664)



(99,185)


Debt issuance costs

(10,365)


(7,366)


(21,950)


(17,731)


(25,102)

Net cash provided by (used in) financing activities

862,293


(168,915)


174,676


693,378


587,330

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

(101,129)


4,593


4,965


(96,536)


(17,054)

Net increase in cash, cash equivalents and restricted cash

193,623


158,042


50,111


351,665


196,220

Cash, cash equivalents and restricted cash at beginning of period

1,707,496


1,549,454


1,771,804


1,549,454


1,625,695

Cash, cash equivalents and restricted cash at end of period

$ 1,901,119


$ 1,707,496


$ 1,821,915


$ 1,901,119


$ 1,821,915

Supplemental cash flow information:

Cash paid for taxes

$      53,609


$      20,150


$      32,667


$      73,759


$      82,637

Cash paid for interest

$    106,249


$    104,051


$    128,636


$    210,300


$    229,691












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

$   (541,150)


$    360,922


$   (126,935)


$   (180,228)


$   (353,112)












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

$    372,775


$    363,996


$     (93,035)


$    736,771


$   (265,475)












(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

$    801,581


$    581,123


$    599,197


$ 1,382,704


$    990,355


Net cash used in investing activities as presented above

(1,369,122)


(258,759)


(728,727)


(1,627,881)


(1,364,411)


Purchases, sales and maturities of investments, net

26,391


38,558


2,595


64,949


20,944


Free cash flow (negative free cash flow)

$   (541,150)


$    360,922


$   (126,935)


$   (180,228)


$   (353,112)












(2)

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


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

$   (541,150)


$    360,922


$   (126,935)


$   (180,228)


$   (353,112)


Less business acquisitions, net of cash and restricted cash acquired

883,668




883,668



Less real estate acquisitions

30,257


3,074


33,900


33,331


87,637


Adjusted free cash flow (negative adjusted free cash flow)

$    372,775


$    363,996


$     (93,035)


$    736,771


$   (265,475)

EQUINIX, INC.

Non-GAAP Measures and Other Supplemental Data

(in thousands)

(unaudited)




Three Months Ended


Six Months Ended



June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021


Recurring revenues

$  1,707,451


$  1,642,324


$  1,542,462


$  3,349,775


$  3,053,395


Non-recurring revenues

109,703


92,123


115,457


201,826


200,588


Revenues (1)

1,817,154


1,734,447


1,657,919


3,551,601


3,253,983













Cash cost of revenues (2)

599,368


583,703


544,196


1,183,071


1,055,006


Cash gross profit (3)

1,217,786


1,150,744


1,113,723


2,368,530


2,198,977













Cash operating expenses (4)(7):










Cash sales and marketing expenses (5)

120,739


124,706


115,282


245,445


228,335


Cash general and administrative expenses (6)

236,715


226,326


201,164


463,041


400,133


Total cash operating expenses (4)(7)

357,454


351,032


316,446


708,486


628,468













Adjusted EBITDA (8)

$     860,332


$     799,712


$     797,277


$  1,660,044


$  1,570,509













Cash gross margins (9)

67 %


66 %


67 %


67 %


68 %













Adjusted EBITDA margins(10)

47 %


46 %


48 %


47 %


48 %













Adjusted EBITDA flow-through rate (11)

73 %


43 %


39 %


51 %


72 %













FFO (12)

$     498,349


$     432,644


$     340,873


$     930,993


$     758,136













AFFO (13)(14)

$     691,392


$     652,632


$     631,937


$  1,344,024


$  1,258,765













Basic FFO per share (15)

$            5.47


$            4.77


$            3.80


$          10.24


$            8.47













Diluted FFO per share (15)

$            5.46


$            4.75


$            3.78


$          10.21


$            8.42













Basic AFFO per share (15)

$            7.59


$            7.19


$            7.05


$          14.79


$          14.07













Diluted AFFO per share (15)

$            7.58


$            7.16


$            7.01


$          14.74


$          13.98























(1)

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













Americas Revenues:






















Colocation

$     541,988


$     522,171


$     497,659


$  1,064,159


$     985,118


Interconnection

187,491


181,103


167,618


368,594


332,505


Managed infrastructure

55,329


49,222


40,734


104,551


79,219


Other

5,581


5,134


451


10,715


2,489


Recurring revenues

790,389


757,630


706,462


1,548,019


1,399,331


Non-recurring revenues

40,475


42,791


44,181


83,266


77,252


Revenues

$     830,864


$     800,421


$     750,643


$  1,631,285


$  1,476,583













EMEA Revenues:






















Colocation

$     433,339


$     414,569


$     398,703


$     847,908


$     786,978


Interconnection

66,845


68,140


65,258


134,985


126,908


Managed infrastructure

30,447


30,990


31,176


61,437


63,287


Other

22,048


6,414


3,682


28,462


8,728


Recurring revenues

552,679


520,113


498,819


1,072,792


985,901


Non-recurring revenues

46,522


30,367


39,110


76,889


70,745


Revenues

$     599,201


$     550,480


$     537,929


$  1,149,681


$  1,056,646













Asia-Pacific Revenues:






















Colocation

$     281,635


$     282,615


$     259,573


$     564,250


$     514,131


Interconnection

60,841


59,987


54,898


120,828


108,080


Managed infrastructure

19,916


20,642


22,094


40,558


44,843


Other

1,991


1,337


616


3,328


1,109


Recurring revenues

364,383


364,581


337,181


728,964


668,163


Non-recurring revenues

22,706


18,965


32,166


41,671


52,591


Revenues

$     387,089


$     383,546


$     369,347


$     770,635


$     720,754













Worldwide Revenues:






















Colocation

$  1,256,962


$  1,219,355


$  1,155,935


$  2,476,317


$  2,286,227


Interconnection

315,177


309,230


287,774


624,407


567,493


Managed infrastructure

105,692


100,854


94,004


206,546


187,349


Other

29,620


12,885


4,749


42,505


12,326


Recurring revenues

1,707,451


1,642,324


1,542,462


3,349,775


3,053,395


Non-recurring revenues

109,703


92,123


115,457


201,826


200,588


Revenues

$  1,817,154


$  1,734,447


$  1,657,919


$  3,551,601


$  3,253,983


































(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

$     930,257


$     915,875


$     865,120


$  1,846,132


$  1,676,337


Depreciation, amortization and accretion expense

(319,011)


(321,729)


(310,916)


(640,740)


(602,856)


Stock-based compensation expense

(11,878)


(10,443)


(10,008)


(22,321)


(18,475)


Cash cost of revenues

$     599,368


$     583,703


$     544,196


$  1,183,071


$  1,055,006













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

















Americas cash cost of revenues

$     243,636


$     239,403


$     234,679


$     483,039


$     428,139


EMEA cash cost of revenues

215,983


202,848


196,661


418,831


395,844


Asia-Pacific cash cost of revenues

139,749


141,452


112,856


281,201


231,023


Cash cost of revenues

$     599,368


$     583,703


$     544,196


$  1,183,071


$  1,055,006






(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

$     564,075


$     545,198


$     507,615


$  1,109,273


$     991,898


Depreciation and amortization expense

(113,817)


(114,657)


(106,842)


(228,474)


(209,220)


Stock-based compensation expense

(92,804)


(79,509)


(84,327)


(172,313)


(154,210)


Cash operating expense

$     357,454


$     351,032


$     316,446


$     708,486


$     628,468












(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

$     193,727


$     192,511


$     185,610


$     386,238


$     368,437


Depreciation and amortization expense

(49,817)


(47,621)


(49,549)


(97,438)


(101,620)


Stock-based compensation expense

(23,171)


(20,184)


(20,779)


(43,355)


(38,482)


Cash sales and marketing expense

$     120,739


$     124,706


$     115,282


$     245,445


$     228,335












(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

$     370,348


$     352,687


$     322,005


$     723,035


$     623,461


Depreciation and amortization expense

(64,000)


(67,036)


(57,293)


(131,036)


(107,600)


Stock-based compensation expense

(69,633)


(59,325)


(63,548)


(128,958)


(115,728)


Cash general and administrative expense

$     236,715


$     226,326


$     201,164


$     463,041


$     400,133












(7)

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













Americas cash SG&A

$     211,004


$     204,463


$     190,040


$     415,467


$     378,028


EMEA cash SG&A

87,836


87,287


78,742


175,123


154,713


Asia-Pacific cash SG&A

58,614


59,282


47,664


117,896


95,727


Cash SG&A

$     357,454


$     351,032


$     316,446


$     708,486


$     628,468












(8)

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













Net income

$     216,242


$     147,693


$        68,487


$     363,935


$     224,561


Income tax expense (benefit)

8,635


32,744


(18,527)


41,379


14,101


Interest income

(4,508)


(2,106)


(374)


(6,614)


(1,103)


Interest expense

90,826


79,965


87,231


170,791


176,912


Other expense

6,238


9,549


39,377


15,787


46,327


(Gain) loss on debt extinguishment

420


(529)


102,460


(109)


115,518


Depreciation, amortization and accretion expense

432,828


436,386


417,758


869,214


812,076


Stock-based compensation expense

104,682


89,952


94,335


194,634


172,685


Transaction costs

5,063


4,240


6,985


9,303


8,167


(Gain) loss on asset sales

(94)


1,818


(455)


1,724


1,265


Adjusted EBITDA

$     860,332


$     799,712


$     797,277


$  1,660,044


$  1,570,509













The geographic split of our adjusted EBITDA is presented below:

















Americas net income (loss)

$       38,199


$     (19,572)


$  (179,570)


$        18,627


$  (190,634)


Americas income tax expense (benefit)

8,516


32,744


(18,522)


41,260


13,725


Americas interest income

(3,904)


(1,728)


(401)


(5,632)


(748)


Americas interest expense

82,160


70,730


77,169


152,890


156,682


Americas other (income) expense

(55,803)