Exhibit 99.1 Equinix Reports Second Quarter 2007 Results -- Increased revenues to $91.8 million, an 8% increase over the previous quarter and a 34% increase over the same quarter last year -- Increased quarterly EBITDA, a non-GAAP financial measure, to $35.3 million, a 9% increase over the previous quarter -- Raises 2007 annual revenue guidance to $373.0 to $377.0 million and EBITDA guidance to $141.0 to $143.0 million -- Announced its intention to acquire IXEurope for approximately GBP 270.1 million FOSTER CITY, Calif.--(BUSINESS WIRE)--July 25, 2007--Equinix, Inc. (Nasdaq:EQIX), the leading provider of network-neutral data centers and Internet exchange services, today reported quarterly results for the period ended June 30, 2007. Revenues were $91.8 million for the second quarter, a 34% increase over the same quarter last year and an 8% increase over the previous quarter. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $87.9 million, a 35% increase over the same quarter last year and a 9% increase over the previous quarter. Non-recurring revenues were $3.9 million in the quarter, consisting primarily of professional services and installation fees. Cost of revenues were $55.6 million for the second quarter, including $1.0 million of stock-based compensation, a 5% increase over the previous quarter and a 22% increase over the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $21.9 million, were $33.7 million for the second quarter, a 6% increase over the previous quarter and a 26% increase over the same quarter last year. Cash gross margins, defined as gross profit less depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 63%, up from 62% the previous quarter and up from 61% the same quarter last year. On a same IBX basis (defined as IBX centers which have been available for new customer installs for at least four full quarters), cash gross margins were 68%. Selling, general and administrative expenses were $33.4 million for the second quarter, including $9.0 million of stock-based compensation, a 6% increase from the previous quarter and a 27% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $10.6 million, were $22.8 million for the second quarter, a 10% increase over the previous quarter and a 29% increase over same quarter last year. Net income for the second quarter was $1.2 million, including stock-based compensation expense of $10.0 million. This represents basic and diluted net income per share of $0.04 based on a weighted average share count of 31.1 million and 32.7 million, respectively. Excluding stock-based compensation and the restructuring charge, the Company had non-GAAP net income of $11.7 million for the second quarter. This was a $2.3 million increase over the prior quarter and an $8.1 million improvement over the same quarter last year. EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation expense and restructuring charges, for the second quarter was $35.3 million, up from $32.4 million the previous quarter and up from $24.0 million the same quarter last year. "Equinix delivered an exceptional second quarter and, as demonstrated by our increased guidance, is positioned for a very strong second half," said Steve Smith, CEO of Equinix. "Our continued execution on our expansion plan and our strategic move into Europe with the announced acquisition of IXEurope demonstrate our ability to fully capitalize on our market leadership position." Capital expenditures in the second quarter were $139.8 million, of which $10.2 million was attributed to ongoing capital expenditures and $129.6 million was attributed to expansion capital expenditures. In addition, the Company purchased a new property in the Los Angeles metro area for $49.0 million with cash in June 2007. The Company generated cash from operating activities of $38.1 million as compared to $20.1 million in the previous quarter. Cash used in investing activities was $157.4 million as compared to $57.6 million in the previous quarter. Adjusted free cash flow was a negative $70.3 million in the second quarter. Adjusted free cash flow is defined as net cash generated from operating activities less net cash used in investing activities (excluding the purchases, sales and maturities of short-term and long-term investments and the purchase and sale of real estate). As of June 30, 2007, the Company's cash, cash equivalents and investments were $324.0 million, as compared to $392.4 million in the previous quarter. Other Company Developments & Metrics -- On a same IBX basis (defined as IBX centers which have been available for new customer installs for at least four full quarters), revenues were $80.5 million; cost of revenues were $42.7 million; cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation, were $25.9 million and cash gross margins for the quarter were 68%. EBITDA on a same IBX basis was $32.5 million -- Equinix added 96 new customers in the quarter -- On a weighted average basis, the number of cabinets billing at the end of the quarter was approximately 19,200 representing an approximate utilization rate of 77% -- U.S. interconnection service revenues were 22% of U.S. recurring revenues for the quarter. Interconnection services represent approximately 20% of total worldwide recurring revenues -- The company announced the acquisition of a site for a new IBX in the Los Angeles market for $49.0 million, which closed in June 2007, as well as its intention to expand its existing IBX center in Santa Clara by approximately 1,100 cabinets -- The company completed its purchase of its flagship Silicon Valley IBX for $65.0 million in early July 2007 Business Outlook For the third quarter 2007, revenues are expected to be in the range of $96.5 to $97.5 million. Cash gross margins are expected to be approximately 61%. Cash selling, general and administrative expenses are expected to be $22.0 to $23.0 million. EBITDA for the third quarter is expected to be $36.0 to $37.0 million. Net loss is expected to be approximately $2.0 million, including the impact of approximately $10.0 million of stock-based compensation expense. Net interest expense is expected to be approximately $6.0 million. The weighted average shares outstanding are expected to be approximately 31.4 million. Capital expenditures are expected to be approximately $100.0 to $105.0 million, including approximately $90.0 million of expansion capital expenditures. For the full year of 2007, total revenues are expected to be in the range of $373.0 to $377.0 million. Total year cash gross margins are expected to be in the range of 61% to 62% including approximately $6.9 million of net cash costs attributed to our expansion IBXs. Cash selling, general and administrative expenses are expected to be approximately $88.0 million. EBITDA for the year is expected to be $141.0 to $143.0 million. Net loss is expected to be in a range of $10.0 to $12.0 million, including the impact of approximately $41.0 million of stock-based compensation expense. Net interest expense and loss on conversion and extinguishment of debt is expected to be approximately $16.0 million. The weighted average shares outstanding are expected to be approximately 30.7 million. Capital expenditures for 2007 are expected to be in a range of $380.0 to $390.0 million, comprised of approximately $40.0 million of ongoing capital expenditures and $340.0 to $350.0 million of expansion capital expenditures for the build out of the Washington, D.C., Tokyo and Singapore expansions opened this year, as well as the announced expansions in the Washington, D.C., Chicago, New York, Silicon Valley and Los Angeles metro areas. This range reflects $10.0 million of expansion capital shifted from 2007 into 2008 for the second phase of the Tokyo build. The Company will discuss its results and guidance on its quarterly conference call on Wednesday, July 25, 2007, at 5:30 p.m. EDT (2:30 p.m. PDT). To hear the conference call live, please dial 1-773-799-3263 (domestic and international) and reference the pass code (EQIX). A simultaneous live Webcast of the call will be available over the Internet at www.equinix.com, under the Investor Relations heading. A replay of the call will be available beginning on Wednesday, July 25, 2007 at 7:30 p.m. EDT (4:30 p.m. PDT) by dialing 1-203-369-3899. In addition, the Webcast will be available on the Company's Web site at www.equinix.com. No password is required for either method of replay. About Equinix Equinix is the leading global provider of network-neutral data centers and Internet exchange services for enterprises, content companies, systems integrators and network services providers. Through the company's Internet Business Exchange(TM) (IBX(R)) centers in 10 markets in the U.S. and Asia, customers can directly interconnect with every major global network and ISP for their critical peering, transit and traffic exchange requirements. These interconnection points facilitate the highest performance and growth of the Internet by serving as neutral and open marketplaces for Internet infrastructure services, allowing customers to expand their businesses while reducing costs. 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 centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of IXEurope into Equinix; a failure to receive significant revenue from customers in recently built out 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; the results of any litigation relating to past stock option grants and practices; and other risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent 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 and IBX are registered trademarks of Equinix, Inc. Internet Business Exchange is a trademark of Equinix, Inc. Non-GAAP Financial Measures Equinix continues to provide 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, such as pro forma revenues, EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), non-GAAP net income (loss), free cash flow and adjusted free cash flow to evaluate its operations. In presenting these non-GAAP financial measures, Equinix excludes certain non-cash or non-recurring items that it believes are not good indicators of the Company's current or future operating performance. These non-cash or non-recurring items are a non-recurring revenue adjustment with respect to 2006 results, depreciation, amortization, accretion, stock-based compensation, restructuring charges and, with respect to 2006 results, the gain on Honolulu IBX sale, and with respect to 2007 results, the loss from conversion of debt. Recent legislative and regulatory changes encourage use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. Equinix excludes these non-cash or non-recurring items in order for Equinix's lenders, investors, and industry analysts who review and report on the Company, to better evaluate the Company's operating performance and cash spending levels relative to its industry sector and competitor base. Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of our IBX centers and do not reflect our current or future cash spending levels to support our business. Our IBX centers are long-lived assets, and have an economic life greater than ten years. The construction costs of our IBX centers do not recur and future capital expenditures remain minor relative to our initial investment. This is a trend we expect to continue. In addition, depreciation is also based on the estimated useful lives of our IBX centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX 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 excludes amortization expense related to certain intangible assets, as it represents a cost that may not recur and is not a good indicator of the Company's current or future operating performance. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charge liabilities, as these expenses represent costs, which Equinix believes are not meaningful in evaluating the Company's current operations. Equinix excludes non-cash stock-based compensation expense as it represents expense attributed to stock awards that have no current or future cash obligations. As such, we, and our investors and analysts, exclude this stock-based compensation expense when assessing the cash generating performance of our operations. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to the Company's decision to exit leases for excess space adjacent to several of our IBX centers, which we do not intend to build out now or in the future. With respect to its 2006 results, Equinix reports pro forma revenues and excludes the gain on Honolulu IBX sale. Pro forma revenues exclude a revenue adjustment recorded in the fourth quarter of 2006 in connection with our adoption of Staff Accounting Bulletin No. 108, which is a one-time adjustment and will not recur. The gain on Honolulu IBX sale represents a unique transaction for the Company and future sales of IBX centers are not expected. The Honolulu market was not considered a core, strategic market for the Company. With respect to its 2007 results, Equinix excludes the loss from conversion of debt as this activity is not typical for the company. Management believes such items as restructuring charges, the gain on the sale of an IBX center and the loss from conversion of debt are unique transactions that are not expected to recur, and consequently, does not consider these items as a normal component of expenses or income related to current and ongoing operations. Our management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. However, we have presented such non-GAAP financial measures to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what management believes to be our core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures provide consistency and comparability with past reports and provide 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, however, 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 that of other companies. In addition, whenever Equinix uses such non-GAAP financial measures, it provides a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure. Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, 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. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how it was calculated for the three and six months ended June 30, 2007 and 2006, presented within this press release. EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION (in thousands, except per share detail) (unaudited) Three Months Ended Six Months Ended --------------------------- ------------------- June 30, March 31, June 30, June 30, June 30, 2007 2007 2006 2007 2006 -------- --------- -------- --------- --------- Recurring revenues $87,904 $80,886 $65,089 $168,790 $126,841 Non-recurring revenues 3,933 4,223 3,459 8,156 6,576 -------- --------- -------- --------- --------- Revenues 91,837 85,109 68,548 176,946 133,417 Cost of revenues 55,609 52,765 45,563 108,374 88,908 -------- --------- -------- --------- --------- Gross profit 36,228 32,344 22,985 68,572 44,509 -------- --------- -------- --------- --------- Operating expenses: Sales and marketing 8,520 8,677 8,480 17,197 15,678 General and administrative 24,854 22,861 17,725 47,715 34,855 Restructuring charges 407 - - 407 - -------- --------- -------- --------- --------- Total operating expenses 33,781 31,538 26,205 65,319 50,533 -------- --------- -------- --------- --------- Income (loss) from operations 2,447 806 (3,220) 3,253 (6,024) -------- --------- -------- --------- --------- Interest and other income (expense): Interest income 5,082 1,949 1,730 7,031 3,341 Interest expense and other (6,115) (3,462) (3,565) (9,577) (7,433) Loss on conversion of debt - (3,395) - (3,395) - -------- --------- -------- --------- --------- Total interest and other, net (1,033) (4,908) (1,835) (5,941) (4,092) -------- --------- -------- --------- --------- Net income (loss) before income taxes and cumulative effect of a change in accounting principle 1,414 (4,102) (5,055) (2,688) (10,116) Income taxes (197) (354) (215) (551) (600) Net income (loss) before cumulative effect of a change in accounting principle 1,217 (4,456) (5,270) (3,239) (10,716) -------- --------- -------- --------- --------- Cumulative effect of a change in accounting principle - - - - 376 -------- --------- -------- --------- --------- Net income (loss) $ 1,217 $(4,456) $(5,270) $ (3,239) $(10,340) ======== ========= ======== ========= ========= Net income (loss) per share: Basic net income (loss) per share $ 0.04 $ (0.15) $ (0.19) $ (0.11) $ (0.37) ======== ========= ======== ========= ========= Diluted net income (loss) per share $ 0.04 $ (0.15) $ (0.19) $ (0.11) $ (0.37) ======== ========= ======== ========= ========= Shares used in computing basic net income (loss) per share 31,126 29,702 28,468 30,424 28,160 ======== ========= ======== ========= ========= Shares used in computing diluted net income (loss) per share 32,671 29,702 28,468 30,424 28,160 ======== ========= ======== ========= ========= - ---------------------------------------------------------------------- Non-GAAP net income (loss) (1) $11,669 $ 9,437 $ 3,627 $ 21,106 $ 6,315 ======== ========= ======== ========= ========= (1)Non-GAAP net income (loss) excludes stock-based compensation, restructuring charges and the loss on debt conversion as follows: Net income (loss) $ 1,217 $(4,456) $(5,270) $ (3,239) $(10,340) Stock-based compensation 10,045 10,498 8,897 20,543 16,655 Restructuring charges 407 - - 407 - Loss on conversion of debt - 3,395 - 3,395 - -------- --------- -------- --------- --------- Non-GAAP net income (loss) $11,669 $ 9,437 $ 3,627 $ 21,106 $ 6,315 ======== ========= ======== ========= ========= EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended Six Months Ended ----------------------------- --------------------- June 30, March 31, June 30, June 30, June 30, 2007 2007 2006 2007 2006 --------- --------- --------- ---------- ---------- Recurring revenues $ 87,904 $ 80,886 $ 65,089 $ 168,790 $ 126,841 Non-recurring revenues 3,933 4,223 3,459 8,156 6,576 --------- --------- --------- ---------- ---------- Revenues (1) 91,837 85,109 68,548 176,946 133,417 Cash cost of revenues (2) 33,739 31,931 26,845 65,670 52,117 --------- --------- --------- ---------- ---------- Cash gross profit (3) 58,098 53,178 41,703 111,276 81,300 --------- --------- --------- ---------- ---------- Cash operating expenses (4): Cash sales and marketing expenses(5) 6,862 6,178 6,333 13,040 11,624 Cash general and admin- istrative expenses (6) 15,925 14,622 11,332 30,547 22,803 --------- --------- --------- ---------- ---------- Total cash operating expenses (7) 22,787 20,800 17,665 43,587 34,427 --------- --------- --------- ---------- ---------- EBITDA (8) $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873 ========= ========= ========= ========== ========== Cash gross margins (9) 63% 62% 61% 63% 61% ========= ========= ========= ========== ========== EBITDA flow-through rate (10) 44% 51% 33% 56% 53% ========= ========= ========= ========== ========== - ------------------- (1)The geographic split of our revenues is presented below: U.S. revenues $ 78,250 $ 72,526 $ 58,900 $ 150,776 $ 114,741 Asia-Pacific revenues 13,587 12,583 9,648 26,170 18,676 --------- --------- --------- ---------- ---------- Revenues $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417 ========= ========= ========= ========== ========== Revenues on a services basis is presented below: Colocation $ 65,641 $ 59,759 $ 47,988 $ 125,400 $ 93,557 Interconnection 17,653 16,720 12,644 34,373 24,448 Managed infrastructure 4,285 4,099 4,046 8,384 7,979 Rental 325 308 411 633 857 --------- --------- --------- ---------- ---------- Recurring revenues 87,904 80,886 65,089 168,790 126,841 Non-recurring revenues 3,933 4,223 3,459 8,156 6,576 --------- --------- --------- ---------- ---------- Revenues $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417 ========= ========= ========= ========== ========== New IBX centers are IBX centers which have not been available for customer installs for at least four full quarters. Revenues on a same IBX versus new IBX basis is presented below: Same IBX centers $ 80,470 $ 77,477 $ 68,190 $ 157,947 $ 130,720 New IBX centers 11,367 7,632 358 18,999 2,697 --------- --------- --------- ---------- ---------- Revenues $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417 ========= ========= ========= ========== ========== (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 $ 55,609 $ 52,765 $ 45,563 $ 108,374 $ 88,908 Depreciation, amortization and accretion expense (20,866) (19,697) (17,755) (40,563) (35,070) Stock-based compensation expense (1,004) (1,137) (963) (2,141) (1,721) --------- --------- --------- ---------- ---------- Cash cost of revenues $ 33,739 $ 31,931 $ 26,845 $ 65,670 $ 52,117 ========= ========= ========= ========== ========== The geographic split of our cash cost of revenues is presented below: U.S. cash cost of revenues $ 27,899 $ 26,498 $ 22,312 $ 54,397 $ 43,263 Asia-Pacific cash cost of revenues 5,840 5,433 4,533 11,273 8,854 --------- --------- --------- ---------- ---------- Cash cost of revenues $ 33,739 $ 31,931 $ 26,845 $ 65,670 $ 52,117 ========= ========= ========= ========== ========== New IBX centers are IBX centers which have not been available for customer installs for at least four full quarters. Cost of revenues and cash cost of revenues on a same IBX versus new IBX basis is presented below: Same IBX centers-cash cost of revenues $ 25,884 $ 25,846 $ 24,849 $ 51,730 $ 47,325 Same IBX centers- depreciation, amortization and accretion expense 15,948 15,885 16,433 31,833 31,965 Same IBX centers-stock- based compensation expense 880 1,006 963 1,886 1,721 --------- --------- --------- ---------- ---------- Same IBX centers cost of revenues 42,712 42,737 42,245 85,449 81,011 --------- --------- --------- ---------- ---------- New IBX centers-cash cost of revenues 7,855 6,085 1,996 13,940 4,792 New IBX centers- depreciation, amortization and accretion expense 4,918 3,812 1,322 8,730 3,105 New IBX centers-stock- based compensation expense 124 131 - 255 - --------- --------- --------- ---------- ---------- New IBX centers cost of revenues 12,897 10,028 3,318 22,925 7,897 --------- --------- --------- ---------- ---------- Cost of revenues $ 55,609 $ 52,765 $ 45,563 $ 108,374 $ 88,908 ========= ========= ========= ========== ========== (3)We define cash gross profit as revenues less cash cost of revenues (as defined above). (4)We define cash operating expenses as operating expenses less depreciation, amortization and stock-based compensation. We also refer to cash operating expenses as cash selling, general and administrative expenses or "cash SG&A". (5)We define cash sales and marketing expenses as sales and marketing expenses less depreciation, amortization and stock-based compensation as presented below: Sales and marketing expenses $ 8,520 $ 8,677 $ 8,480 $ 17,197 $ 15,678 Depreciation and amortization expense (15) (15) (15) (30) (30) Stock-based compensation expense (1,643) (2,484) (2,132) (4,127) (4,024) --------- --------- --------- ---------- ---------- Cash sales and marketing expenses $ 6,862 $ 6,178 $ 6,333 $ 13,040 $ 11,624 ========= ========= ========= ========== ========== (6)We define cash general and administrative expenses as general and administrative expenses less depreciation, amortization and stock-based compensation as presented below: General and administrative expenses $ 24,854 $ 22,861 $ 17,725 $ 47,715 $ 34,855 Depreciation and amortization expense (1,531) (1,362) (591) (2,893) (1,142) Stock-based compensation expense (7,398) (6,877) (5,802) (14,275) (10,910) --------- --------- --------- ---------- ---------- Cash general and admin- istrative expenses $ 15,925 $ 14,622 $ 11,332 $ 30,547 $ 22,803 ========= ========= ========= ========== ========== (7)Our cash operating expenses, or cash SG&A, as defined above, is presented below: Cash sales and marketing expenses $ 6,862 $ 6,178 $ 6,333 $ 13,040 $ 11,624 Cash general and administrative expenses 15,925 14,622 11,332 30,547 22,803 --------- --------- --------- ---------- ---------- Cash SG&A $ 22,787 $ 20,800 $ 17,665 $ 43,587 $ 34,427 ========= ========= ========= ========== ========== The geographic split of our cash operating expenses, or cash SG&A, is presented below: U.S. cash SG&A $ 19,328 $ 17,071 $ 14,599 $ 36,399 $ 27,926 Asia-Pacific cash SG&A 3,459 3,729 3,066 7,188 6,501 --------- --------- --------- ---------- ---------- Cash SG&A $ 22,787 $ 20,800 $ 17,665 $ 43,587 $ 34,427 ========= ========= ========= ========== ========== (8)We define EBITDA as income (loss) from operations less depreciation, amortization, accretion, stock-based compensation expense and restructuring charges as presented below: Income (loss) from operations $ 2,447 $ 806 $ (3,220) $ 3,253 $ (6,024) Depreciation, amortization and accretion expense 22,412 21,074 18,361 43,486 36,242 Stock-based compensation expense 10,045 10,498 8,897 20,543 16,655 Restructuring charges 407 - - 407 - --------- --------- --------- ---------- ---------- EBITDA $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873 ========= ========= ========= ========== ========== The geographic split of our EBITDA is presented below: U.S. income (loss) from operations $ 1,246 $ 368 $ (3,405) $ 1,614 $ (5,651) U.S. depreciation, amortization and accretion expense 20,626 19,439 17,419 40,065 34,285 U.S. stock- based compensation expense 8,744 9,150 7,975 17,894 14,918 U.S. restructuring charges 407 - - 407 - --------- --------- --------- ---------- ---------- U.S. EBITDA 31,023 28,957 21,989 59,980 43,552 --------- --------- --------- ---------- ---------- Asia-Pacific income (loss) from operations 1,201 438 185 1,639 (373) Asia-Pacific depreciation, amortization and accretion expense 1,786 1,635 942 3,421 1,957 Asia-Pacific stock-based compensation expense 1,301 1,348 922 2,649 1,737 Asia-Pacific restructuring charges - - - - - --------- --------- --------- ---------- ---------- Asia-Pacific EBITDA 4,288 3,421 2,049 7,709 3,321 --------- --------- --------- ---------- ---------- EBITDA $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873 ========= ========= ========= ========== ========== New IBX centers are IBX centers which have not been available for customer installs for at least four full quarters. EBITDA on a same IBX versus new IBX basis is presented below: Same IBX centers-income (loss) from operations $ 4,689 $ 3,925 $ 76 $ 8,614 $ (292) Same IBX centers- depreciation, amortization and accretion expense 17,494 17,262 17,039 34,756 33,137 Same IBX centers-stock- based compensation expense 9,921 10,367 8,897 20,288 16,655 Same IBX centers- restructuring charges 407 - - 407 - --------- --------- --------- ---------- ---------- Same IBX center EBITDA 32,511 31,554 26,012 64,065 49,500 --------- --------- --------- ---------- ---------- New IBX centers-income (loss) from operations (2,242) (3,119) (3,296) (5,361) (5,732) New IBX centers- depreciation, amortization and accretion expense 4,918 3,812 1,322 8,730 3,105 New IBX centers-stock- based compensation expense 124 131 - 255 - New IBX centers- restructuring charges - - - - - --------- --------- --------- ---------- ---------- New IBX center EBITDA 2,800 824 (1,974) 3,624 (2,627) --------- --------- --------- ---------- ---------- EBITDA $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873 ========= ========= ========= ========== ========== (9)We define cash gross margins as cash gross profit divided by revenues. Our cash gross margins by geographic region is presented below: U.S. cash gross margins 64% 63% 62% 64% 62% ========= ========= ========= ========== ========== Asia-Pacific cash gross margins 57% 57% 53% 57% 53% ========= ========= ========= ========== ========== Same IBX centers are IBX centers which have been available for customer installs for at least four full quarters. Our cash gross margins for same IBX centers is presented below: Same IBX cash gross margins 68% 67% 64% 67% 64% ========= ========= ========= ========== ========== (10)We define EBITDA flow-through rate as incremental EBITDA growth divided by incremental revenue growth as follows: EBITDA - current period $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873 Less EBITDA - prior period (32,378) (30,272) (22,835) (55,199) (39,747) --------- --------- --------- ---------- ---------- EBITDA growth $ 2,933 $ 2,106 $ 1,203 $ 12,490 $ 7,126 ========= ========= ========= ========== ========== Revenues - current period $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417 Less pro forma revenues - prior period (85,109) (80,951) (64,869) (154,677) (119,894) --------- --------- --------- ---------- ---------- Pro forma revenue growth $ 6,728 $ 4,158 $ 3,679 $ 22,269 $ 13,523 ========= ========= ========= ========== ========== EBITDA flow- through rate 44% 51% 33% 56% 53% ========= ========= ========= ========== ========== EQUINIX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) Assets June 30, December 31, 2007 2006 ----------- ------------ Cash, cash equivalents and investments $ 323,966 $ 156,481 Accounts receivable, net 28,140 26,864 Property and equipment, net 760,175 546,395 Goodwill and other intangible assets, net 17,299 17,441 Debt issuance costs, net 14,603 3,006 Deposits 10,470 3,932 Prepaid expenses 7,845 7,160 Deferred tax assets 6,612 6,910 Other assets 6,341 3,643 ----------- ------------ Total assets $1,175,451 $ 771,832 =========== ============ Liabilities and Stockholders' Equity Accounts payable and accrued expenses $ 35,425 $ 27,269 Accrued property and equipment 71,216 23,337 Accrued restructuring charges 36,416 41,572 Capital lease and other financing obligations 93,754 94,699 Mortgage and loan payable 167,129 98,896 Convertible debt 282,250 86,250 Deferred rent 20,907 20,924 Deferred installation revenue 13,764 11,694 Deferred recurring revenue 6,171 6,732 Asset retirement obligations 4,273 3,985 Other liabilities 1,472 1,446 ----------- ------------ Total liabilities 732,777 416,804 ----------- ------------ Common stock 32 29 Additional paid-in capital 995,555 904,573 Accumulated other comprehensive income 3,770 3,870 Accumulated deficit (556,683) (553,444) ----------- ------------ Total stockholders' equity 442,674 355,028 ----------- ------------ Total liabilities and stockholders' equity $1,175,451 $ 771,832 =========== ============ - --------------------------------------------------------- ------------ Ending headcount by geographic region is as follows: U.S. headcount 476 442 Asia-pacific headcount 183 174 ----------- ------------ Total headcount 659 616 =========== ============ EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended Six Months Ended ------------------------------ -------------------- June 30, March 31, June 30, June 30, June 30, 2007 2007 2006 2007 2006 ---------- --------- --------- ---------- --------- Net cash provided by operating activities $ 37,862 $ 19,850 $ 16,107 $ 57,712 $ 28,898 Net cash used in investing activities (181,892) (48,057) (25,348) (229,949) (60,921) Net cash provided by (used in) financing activities 50,519 273,253 5,376 323,772 (10,109) Effect of foreign currency exchange rates on cash and cash equivalents 449 51 40 500 165 ---------- --------- --------- ---------- --------- Net increase (decrease) in cash and cash equivalents (93,062) 245,097 (3,825) 152,035 (41,967) Cash and cash equivalents at beginning of period 327,660 82,563 81,125 82,563 119,267 ---------- --------- --------- ---------- --------- Cash and cash equivalents at end of period $ 234,598 $327,660 $ 77,300 $ 234,598 $ 77,300 ========== ========= ========= ========== ========= In addition to the above condensed consolidated statements of cash flows presented on a GAAP basis, the Company presents non-GAAP condensed consolidated statements of cash flows which combine the Company's short-term and long-term investments with our cash and cash equivalents in an effort to present our total unrestricted cash and equivalent balances as presented herein in our condensed consolidated balance sheets. Following is a reconciliation of our cash and cash equivalents to our cash, cash equivalents and investments, which is the basis of how our non-GAAP condensed consolidated statements of cash flows are presented on the following page: Cash and cash equivalents $ 234,598 $327,660 $ 77,300 $ 234,598 $ 77,300 Short-term investments 67,728 53,758 53,524 67,728 53,524 Long-term investments 21,640 10,981 17,115 21,640 17,115 ---------- --------- --------- ---------- --------- Cash, cash equivalents and investments as presented on condensed balance sheet presented herein $ 323,966 $392,399 $147,939 $ 323,966 $147,939 ========== ========= ========= ========== ========= EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NON-GAAP PRESENTATION (1) (in thousands) (unaudited) Three Months Ended Six Months Ended ------------------------------ -------------------- June 30, March 31, June 30, June 30, June 30, 2007 2007 2006 2007 2006 ---------- --------- --------- ---------- --------- Cash flows from operating activities: Net income (loss) $ 1,217 $ (4,456) $ (5,270) $ (3,239) $(10,340) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and accretion 22,412 21,074 18,361 43,486 36,242 Stock-based compensation 10,045 10,498 8,897 20,543 16,655 Debt issuance costs 784 389 208 1,173 416 Restructuring charges 407 - - 407 - Other reconciling items 138 7 (64) 145 (791) Changes in operating assets and liabilities: Accounts receivable (494) (916) (5,011) (1,410) (6,262) Accounts payable and accrued expenses 7,950 (2,657) 2,597 5,293 1,604 Accrued restructuring charges (3,354) (3,543) (3,168) (6,897) (6,125) Other assets and liabilities (965) (302) (443) (1,267) (2,501) ---------- --------- --------- ---------- --------- Net cash provided by operating activities 38,140 20,094 16,107 58,234 28,898 ---------- --------- --------- ---------- --------- Cash flows from investing activities: Purchase of Los Angeles IBX property (49,040) - - (49,040) - Purchase of San Jose IBX property - (6,500) - (6,500) - Purchase of Chicago IBX property - - (9,766) - (9,766) Purchases of other property and equipment (139,832) (67,056) (29,671) (206,888) (56,284) Accrued property and equipment 31,425 16,454 3,643 47,879 6,155 Other investing activities - (470) - (470) 6 ---------- --------- --------- ---------- --------- Net cash used in investing activities (157,447) (57,572) (35,794) (215,019) (59,889) ---------- --------- --------- ---------- --------- Cash flows from financing activities: Proceeds from stock options and employee stock purchase plans 6,876 10,286 5,862 17,162 20,576 Proceeds from convertible subordinated notes - 250,000 - 250,000 - Proceeds from loan payable 44,656 24,607 - 69,263 - Repayment of borrowings under credit line - - - - (30,000) Repayment of capital lease and other financing obligations (480) (465) (375) (945) (739) Repayment of mortgage payable (533) (497) (311) (1,030) (516) Debt issuance costs - (10,678) - (10,678) - Other financing activities - - 200 - 570 ---------- --------- --------- ---------- --------- Net cash provided by (used in) financing activities 50,519 273,253 5,376 323,772 (10,109) ---------- --------- --------- ---------- --------- Effect of foreign currency exchange rates on cash and cash equivalents 355 143 27 498 184 ---------- --------- --------- ---------- --------- Net increase (decrease) in cash, cash equivalents and investments (68,433) 235,918 (14,284) 167,485 (40,916) Cash, cash equivalents and investments at beginning of period 392,399 156,481 162,223 156,481 188,855 ---------- --------- --------- ---------- --------- Cash, cash equivalents and investments at end of period $ 323,966 $392,399 $147,939 $ 323,966 $147,939 ========== ========= ========= ========== ========= Free cash flow (2) $(119,307) $(37,478) $(19,687) $(156,785) $(30,991) ========== ========= ========= ========== ========= Adjusted free cash flow (3) $ (70,267) $(30,978) $ (9,921) $(101,245) $(21,225) ========== ========= ========= ========== ========= - ------------------- (1)The cash flow statements presented herein combine our short-term and long-term investments with our cash and cash equivalents in an effort to present our total unrestricted cash and equivalent balances. In our quarterly filings with the SEC on Forms 10-Q and 10-K, the purchases, sales and maturities of our short-term and long-term investments will be presented as activities within the investing activities portion of the cash flow statements. (2)We define free cash flow as net cash provided by operating activities plus net cash used in investing activities (excluding the purchases, sales and maturities of short-term and long-term investments) as presented below: Net cash provided by operating activities as presented above $ 38,140 $ 20,094 $ 16,107 $ 58,234 $ 28,898 Net cash used in investing activities as presented above (157,447) (57,572) (35,794) (215,019) (59,889) ---------- --------- --------- ---------- --------- Free cash flow $(119,307) $(37,478) $(19,687) $(156,785) $(30,991) ========== ========= ========= ========== ========= (3)We define adjusted free cash flow as free cash flow (as defined above) excluding any purchases or sales of real estate as presented below: Free cash flow (as defined above) $(119,307) $(37,478) $(19,687) $(156,785) $(30,991) Less purchase of Los Angeles IBX property 49,040 - - 49,040 - Less purchase of San Jose IBX property - 6,500 - 6,500 - Less purchase of Chicago IBX property - - 9,766 - 9,766 ---------- --------- --------- ---------- --------- Adjusted free cash flow $ (70,267) $(30,978) $ (9,921) $(101,245) $(21,225) ========== ========= ========= ========== ========= CONTACT: Equinix, Inc. Jason Starr, 650-513-7402 (Investor Relations) jstarr@equinix.com or K/F Communications, Inc. David Fonkalsrud, 415-255-6506 (Media) dave@kfcomm.com