Exhibit 99.1 Equinix Reports Third Quarter 2007 Results -- Increased revenues to $103.8 million, a 13% increase over the previous quarter and a 41% increase over the same quarter last year -- Increased quarterly EBITDA, a non-GAAP financial measure, to $40.6 million, a 15% increase over the previous quarter -- Raised 2007 annual revenue guidance to $416.0 to $417.5 million and EBITDA guidance to $153.0 to $154.0 million -- Raised 2008 annual revenue guidance to $625.0 to $640.0 million and EBITDA guidance to $240.0 million to $250.0 million -- Opened greenfield expansion IBX in the Chicago metro area in October, its third IBX center in the region FOSTER CITY, Calif.--(BUSINESS WIRE)--Oct. 30, 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 September 30, 2007. Revenues were $103.8 million for the third quarter, a 13% increase over the previous quarter and a 41% increase over the same quarter last year, including approximately $5.5 million of revenues from Europe as a result of the IXEurope acquisition that closed on September 14, 2007. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $99.3 million, a 13% increase over the prior quarter and a 42% increase over the same quarter last year. Non-recurring revenues were $4.5 million in the quarter. Cost of revenues were $62.9 million for the third quarter, including $878,000 of stock-based compensation, a 13% increase over the previous quarter and a 28% increase over the same quarter last year, including cost of revenues of $4.0 million from Europe. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $22.7 million, were $40.2 million for the third quarter, a 19% increase over the previous quarter and a 35% 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 61%, down from 63% the previous quarter and up from 60% 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 65%. Selling, general and administrative expenses were $34.8 million for the third quarter, including $9.6 million of stock-based compensation, a 4% increase from the previous quarter and a 33% increase over the same quarter last year, including selling, general and administrative expenses of $2.0 million from Europe. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $11.9 million, were $22.9 million for the third quarter, a 1% increase over the previous quarter and a 20% increase over same quarter last year. Net income for the third quarter was $4.1 million, including stock-based compensation expense of $10.5 million. This represents basic net income per share of $0.13 and diluted net income per share of $0.12 based on a weighted average share count of 31.7 million and 33.1 million, respectively. EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation expense and restructuring charges, for the third quarter was $40.6 million, up from $35.3 million the previous quarter and up from $24.9 million the same quarter last year. "Equinix continued to deliver strong results across all areas of the business," said Steve Smith, CEO of Equinix. "As we look into 2008, the business has never been better and we intend to fully capitalize on the strong market fundamentals and our solid execution to maximize our global market leadership position." Capital expenditures in the third quarter were $88.9 million, of which $5.0 million was attributed to ongoing capital expenditures and $83.9 million was attributed to expansion capital expenditures. This result is less than expected, as certain capital expenditures attributed to expansion projects will move into the fourth quarter. In addition, the Company spent $65.0 million on real estate acquisition activities in the Silicon Valley and $541.7 million on the IXEurope acquisition, net of cash acquired, in the third quarter. The Company generated cash from operating activities of $48.7 million as compared to $38.1 million in the previous quarter. Cash used in investing activities was $718.2 million as compared to $157.4 million in the previous quarter with the increase largely attributed to the IXEurope acquisition. As of September 30, 2007, the Company's cash, cash equivalents and investments were $436.4 million, as compared to $324.0 million at the end of the previous quarter. This included net proceeds attributed to its $750.0 million concurrent underwritten public offering of 4,211,939 shares of common stock and the 3.00% Convertible Subordinated Notes due 2014, which closed on September 26, 2007 offset in part by the costs attributed to the IXEurope acquisition. 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 $97.1 million; cost of revenues were $53.9 million; cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation, were $34.3 million and cash gross margins for the quarter were 65% -- On a weighted average basis, and excluding the impact of the IXEurope acquisition, the number of cabinets billing was approximately 20,100 representing an approximate utilization rate of 78% -- U.S. interconnection service revenues were 21% of U.S. revenues for the quarter. Interconnection services represent approximately 18% of total worldwide revenues. We expect interconnection revenue to decline to 15% to 16% of total worldwide revenues as the full quarter impact of IXEurope revenues is reflected in the Company's results in the fourth quarter. Business Outlook As previously announced, for the full year of 2007, total revenues are expected to be in the range of $416.0 to $417.5 million, including approximately $38.0 million anticipated from Europe. Total year cash gross margins are expected to be approximately 62%, including approximately $6.9 million of net cash costs attributed to its expansion IBXs. EBITDA for the year is expected to be between $153.0 and $154.0 million. Capital expenditures for 2007 are expected to be $405.0 to $415.0 million, including approximately $46.0 million of ongoing capital expenditures and approximately $30.0 million of capital expenditures related to Europe. Expansion capital expenditures are for the build outs of the Frankfurt, London, Paris, Singapore, Tokyo, Washington, D.C., and Chicago expansions opened this year, as well as the announced expansions in London, Los Angeles, New York, Silicon Valley and Washington D.C. metro areas. For the full year of 2008, total revenues are expected to be in the range of $625.0 to $640.0 million, including $150.0 to $160.0 million anticipated from Europe. EBITDA for the year is expected to be between $240.0 and $250.0 million, including $42.0 to $50.0 million anticipated from Europe. Capital expenditures for 2008 are expected to be in a range of $300.0 to $310.0 million, comprised of approximately $45.0 million of ongoing capital expenditures, including $15.0 million related to Europe, and $255.0 to $265.0 million of expansion capital expenditures, including $50.0 million related to Europe. The Company will discuss its results and guidance on its quarterly conference call on Tuesday, October 30, 2007, at 5:30 p.m. EDT (2:30 p.m. PDT). To hear the conference call live, please dial 1-210-839-8500 (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 Tuesday, October 30, 2007 at 7:30 p.m. EDT (4:30 p.m. PDT) by dialing 1-203-369-1656. 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 center and interconnection services, offering premium colocation, traffic exchange and outsourced IT infrastructure solutions. Global enterprises, content companies, systems integrators and network service providers look to Equinix Internet Business Exchange (IBX(R)) centers for world-class reliability and network diversity. Equinix IBX centers serve as critical, core hubs for IP networks and Internet operations worldwide. With 36 IBX centers located in 17 strategic markets across North America, Europe and Asia-Pacific, Equinix enables customers to reliably operate their mission-critical infrastructure on a global basis. 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 non-GAAP 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 and extinguishment 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 non-GAAP revenues and excludes the gain on Honolulu IBX sale. Non-GAAP 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 and extinguishment 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 and extinguishment 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 nine months ended September 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 Nine Months Ended ---------------------------- ------------------- September June September September September 30, 30, 30, 30, 30, 2007 2007 2006 2007 2006 --------- -------- --------- --------- --------- Recurring revenues $ 99,288 $87,904 $69,918 $268,078 $196,759 Non-recurring revenues 4,494 3,933 3,808 12,650 10,384 --------- -------- --------- --------- --------- Revenues 103,782 91,837 73,726 280,728 207,143 Cost of revenues 62,891 55,609 49,137 171,265 138,045 --------- -------- --------- --------- --------- Gross profit 40,891 36,228 24,589 109,463 69,098 --------- -------- --------- --------- --------- Operating expenses: Sales and marketing 9,630 8,520 7,502 27,602 23,180 General and administrative 25,182 24,854 18,631 72,122 53,486 Restructuring charges - 407 1,527 407 1,527 --------- -------- --------- --------- --------- Total operating expenses 34,812 33,781 27,660 100,131 78,193 --------- -------- --------- --------- --------- Income (loss) from operations 6,079 2,447 (3,071) 9,332 (9,095) --------- -------- --------- --------- --------- Interest and other income (expense): Interest income 3,309 5,082 1,724 10,340 5,065 Interest expense (5,662) (5,986) (3,604) (15,240) (10,820) Other income (expense) 3,167 (129) 53 3,168 (164) Loss on conversion and extinguishment of debt (2,554) - - (5,949) - --------- -------- --------- --------- --------- Total interest and other, net (1,740) (1,033) (1,827) (7,681) (5,919) --------- -------- --------- --------- --------- Net income (loss) before income taxes and cumulative effect of a change in accounting principle 4,339 1,414 (4,898) 1,651 (15,014) Income taxes (215) (197) (270) (766) (870) --------- -------- --------- --------- --------- Net income (loss) before cumulative effect of a change in accounting principle 4,124 1,217 (5,168) 885 (15,884) Cumulative effect of a change in accounting principle - - - - 376 --------- -------- --------- --------- --------- Net income (loss) $ 4,124 $ 1,217 $(5,168) $ 885 $(15,508) ========= ======== ========= ========= ========= Net income (loss) per share: Basic net income (loss) per share $ 0.13 $ 0.04 $ (0.18) $ 0.03 $ (0.55) ========= ======== ========= ========= ========= Diluted net income (loss) per share $ 0.12 $ 0.04 $ (0.18) $ 0.03 $ (0.55) ========= ======== ========= ========= ========= Shares used in computing basic net income (loss) per share 31,683 31,126 28,743 30,845 28,356 ========= ======== ========= ========= ========= Shares used in computing diluted net income (loss) per share 33,112 32,671 28,743 32,339 28,356 ========= ======== ========= ========= ========= - ---------------------------------------------------------------------- Non-GAAP net income (loss) (1) $ 17,167 $11,669 $ 3,244 $ 38,273 $ 9,559 ========= ======== ========= ========= ========= (1) Non-GAAP net income (loss) excludes stock-based compensation, restructuring charges and loss on debt conversion and extinguishment as follows: Net income (loss) $ 4,124 $ 1,217 $(5,168) $ 885 $(15,508) Stock-based compensation 10,489 10,045 6,885 31,032 23,540 Restructuring charges - 407 1,527 407 1,527 Loss on conversion and extinguishment of debt 2,554 - - 5,949 - --------- -------- --------- --------- --------- Non-GAAP net income (loss) $ 17,167 $11,669 $ 3,244 $ 38,273 $ 9,559 ========= ======== ========= ========= ========= EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended Nine Months Ended ----------------------------- ------------------- September June September September September 30, 30, 30, 30, 30, 2007 2007 2006 2007 2006 --------- --------- --------- --------- --------- Recurring revenues $ 99,288 $ 87,904 $ 69,918 $268,078 $196,759 Non-recurring revenues 4,494 3,933 3,808 12,650 10,384 --------- --------- --------- --------- --------- Revenues (1) 103,782 91,837 73,726 280,728 207,143 Cash cost of revenues (2) 40,240 33,739 29,738 105,910 81,855 --------- --------- --------- --------- --------- Cash gross profit (3) 63,542 58,098 43,988 174,818 125,288 --------- --------- --------- --------- --------- Cash operating expenses (4): Cash sales and marketing expenses(5) 7,283 6,862 5,864 20,834 17,488 Cash general and administrative expenses (6) 15,620 15,925 13,197 45,656 36,000 --------- --------- --------- --------- --------- Total cash operating expenses (7) 22,903 22,787 19,061 66,490 53,488 --------- --------- --------- --------- --------- EBITDA (8) $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800 ========= ========= ========= ========= ========= Cash gross margins (9) 61% 63% 60% 62% 60% ========= ========= ========= ========= ========= EBITDA flow-through rate (10) 45% 44% 17% 51% 46% ========= ========= ========= ========= ========= - -------------------- (1)The geographic split of our revenues is presented below: U.S. revenues $ 83,685 $ 78,250 $ 63,654 $234,461 $178,394 Asia-Pacific revenues 14,643 13,587 10,072 40,813 28,749 Europe revenues 5,454 - - 5,454 - --------- --------- --------- --------- --------- Revenues $103,782 $ 91,837 $ 73,726 $280,728 $207,143 ========= ========= ========= ========= ========= Revenues on a services basis is presented below: Colocation $ 75,282 $ 65,641 $ 51,678 $200,682 $145,235 Interconnection 18,798 17,653 13,862 53,171 38,310 Managed infrastructure 4,830 4,285 4,066 13,214 12,045 Rental 378 325 312 1,011 1,169 --------- --------- --------- --------- --------- Recurring revenues 99,288 87,904 69,918 268,078 196,759 Non-recurring revenues 4,494 3,933 3,808 12,650 10,384 --------- --------- --------- --------- --------- Revenues $103,782 $ 91,837 $ 73,726 $280,728 $207,143 ========= ========= ========= ========= ========= 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 $ 97,073 $ 80,470 $ 71,572 $255,020 $202,292 New IBX centers 6,709 11,367 2,154 25,708 4,851 --------- --------- --------- --------- --------- Revenues $103,782 $ 91,837 $ 73,726 $280,728 $207,143 ========= ========= ========= ========= ========= (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 $ 62,891 $ 55,609 $ 49,137 $171,265 $138,045 Depreciation, amortization and accretion expense (21,773) (20,866) (18,735) (62,336) (53,805) Stock-based compensation expense (878) (1,004) (664) (3,019) (2,385) --------- --------- --------- --------- --------- Cash cost of revenues $ 40,240 $ 33,739 $ 29,738 $105,910 $ 81,855 ========= ========= ========= ========= ========= The geographic split of our cash cost of revenues is presented below: U.S. cash cost of revenues $ 30,677 $ 27,899 $ 25,154 $ 85,074 $ 68,417 Asia-Pacific cash cost of revenues 6,536 5,840 4,584 17,809 13,438 Europe cash cost of revenues 3,027 - - 3,027 - --------- --------- --------- --------- --------- Cash cost of revenues $ 40,240 $ 33,739 $ 29,738 $105,910 $ 81,855 ========= ========= ========= ========= ========= 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 $ 34,285 $ 25,884 $ 26,422 $ 86,015 $ 73,747 Same IBX centers- depreciation, amortization and accretion expense 18,905 15,948 16,445 50,738 48,410 Same IBX centers-stock- based compensation expense 751 880 632 2,637 2,353 --------- --------- --------- --------- --------- Same IBX centers cost of revenues 53,941 42,712 43,499 139,390 124,510 --------- --------- --------- --------- --------- New IBX centers- cash cost of revenues 5,955 7,855 3,316 19,895 8,108 New IBX centers- depreciation, amortization and accretion expense 2,868 4,918 2,290 11,598 5,395 New IBX centers- stock-based compensation expense 127 124 32 382 32 --------- --------- --------- --------- --------- New IBX centers cost of revenues 8,950 12,897 5,638 31,875 13,535 --------- --------- --------- --------- --------- Cost of revenues $ 62,891 $ 55,609 $ 49,137 $171,265 $138,045 ========= ========= ========= ========= ========= (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 $ 9,630 $ 8,520 $ 7,502 $ 27,602 $ 23,180 Depreciation and amortization expense (298) (15) (15) (328) (45) Stock-based compensation expense (2,049) (1,643) (1,623) (6,440) (5,647) --------- --------- --------- --------- --------- Cash sales and marketing expenses $ 7,283 $ 6,862 $ 5,864 $ 20,834 $ 17,488 ========= ========= ========= ========= ========= (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 $ 25,182 $ 24,854 $ 18,631 $ 72,122 $ 53,486 Depreciation and amortization expense (2,000) (1,531) (836) (4,893) (1,978) Stock-based compensation expense (7,562) (7,398) (4,598) (21,573) (15,508) --------- --------- --------- --------- --------- Cash general and administrative expenses $ 15,620 $ 15,925 $ 13,197 $ 45,656 $ 36,000 ========= ========= ========= ========= ========= (7)Our cash operating expenses, or cash SG&A, as defined above, is presented below: Cash sales and marketing expenses $ 7,283 $ 6,862 $ 5,864 $ 20,834 $ 17,488 Cash general and administrative expenses 15,620 15,925 13,197 45,656 36,000 --------- --------- --------- --------- --------- Cash SG&A $ 22,903 $ 22,787 $ 19,061 $ 66,490 $ 53,488 ========= ========= ========= ========= ========= The geographic split of our cash operating expenses, or cash SG&A, is presented below: U.S. cash SG&A $ 17,565 $ 19,328 $ 16,261 $ 53,964 $ 44,187 Asia-Pacific cash SG&A 3,953 3,459 2,800 11,141 9,301 Europe cash SG&A 1,385 - - 1,385 - --------- --------- --------- --------- --------- Cash SG&A $ 22,903 $ 22,787 $ 19,061 $ 66,490 $ 53,488 ========= ========= ========= ========= ========= (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 $ 6,079 $ 2,447 $ (3,071) $ 9,332 $ (9,095) Depreciation, amortization and accretion expense 24,071 22,412 19,586 67,557 55,828 Stock-based compensation expense 10,489 10,045 6,885 31,032 23,540 Restructuring charges - 407 1,527 407 1,527 --------- --------- --------- --------- --------- EBITDA $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800 ========= ========= ========= ========= ========= The geographic split of our EBITDA is presented below: U.S. income (loss) from operations $ 6,386 $ 1,246 $ (3,967) $ 8,000 $ (9,619) U.S. depreciation, amortization and accretion expense 20,175 20,626 18,607 60,240 52,892 U.S. stock-based compensation expense 8,882 8,744 6,072 26,776 20,990 U.S. restructuring charges - 407 1,527 407 1,527 --------- --------- --------- --------- --------- U.S. EBITDA 35,443 31,023 22,239 95,423 65,790 --------- --------- --------- --------- --------- Asia-Pacific income (loss) from operations 312 1,201 896 1,951 524 Asia-Pacific depreciation, amortization and accretion expense 2,584 1,786 979 6,005 2,936 Asia-Pacific stock-based compensation expense 1,258 1,301 813 3,907 2,550 Asia-Pacific restructuring charges - - - - - --------- --------- --------- --------- --------- Asia-Pacific EBITDA 4,154 4,288 2,688 11,863 6,010 --------- --------- --------- --------- --------- Europe income (loss) from operations (619) - - (619) - Europe depreciation, amortization and accretion expense 1,312 - - 1,312 - Europe stock- based compensation expense 349 - - 349 - Europe restructuring charges - - - - - --------- --------- --------- --------- --------- Europe EBITDA 1,042 - - 1,042 - --------- --------- --------- --------- --------- EBITDA $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800 ========= ========= ========= ========= ========= (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 63% 64% 60% 64% 62% ========= ========= ========= ========= ========= Asia-Pacific cash gross margins 55% 57% 54% 56% 53% ========= ========= ========= ========= ========= Europe cash gross margins 44% n/a n/a 44% n/a ========= ========= ========= ========= ========= 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 65% 68% 63% 66% 64% ========= ========= ========= ========= ========= (10)We define EBITDA flow-through rate as incremental EBITDA growth divided by incremental revenue growth as follows: EBITDA - current period $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800 Less EBITDA - prior period (35,311) (32,378) (24,038) (79,237) (55,802) --------- --------- --------- --------- --------- EBITDA growth $ 5,328 $ 2,933 $ 889 $ 29,091 $ 15,998 ========= ========= ========= ========= ========= Revenues - current period $103,782 $ 91,837 $ 73,726 $280,728 $207,143 Less Non-GAAP revenues - prior period (91,837) (85,109) (68,548) (223,225) (172,373) --------- --------- --------- --------- --------- Non-GAAP revenue growth $ 11,945 $ 6,728 $ 5,178 $ 57,503 $ 34,770 ========= ========= ========= ========= ========= EBITDA flow- through rate 45% 44% 17% 51% 46% ========= ========= ========= ========= ========= EQUINIX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) Assets September December 30, 31, 2007 2006 ----------- ---------- Cash, cash equivalents and investments $ 436,362 $ 156,481 Accounts receivable, net 49,176 26,864 Property and equipment, net 1,069,080 546,395 Goodwill and other intangible assets, net 500,468 17,441 Debt issuance costs, net 22,474 3,006 Prepaid expenses 15,245 7,160 Deposits 12,167 3,932 Taxes receivable 11,807 5 Deferred tax assets 7,801 6,910 Other assets 5,986 3,638 ----------- ---------- Total assets $2,130,566 $ 771,832 =========== ========== Liabilities and Stockholders' Equity Accounts payable $ 18,992 $ 4,515 Accrued expenses 75,347 22,754 Accrued property and equipment 60,469 23,337 Accrued restructuring charges 33,813 41,572 Capital lease and other financing obligations 98,266 94,699 Mortgage and loan payable 282,108 98,896 Convertible debt 678,236 86,250 Deferred rent 26,051 20,924 Deferred installation revenue 17,705 11,694 Deferred recurring revenue 11,135 6,732 Asset retirement obligations 4,859 3,985 Other liabilities 8,908 1,446 ----------- ---------- Total liabilities 1,315,889 416,804 ----------- ---------- Common stock 36 29 Additional paid-in capital 1,356,427 904,573 Accumulated other comprehensive income 10,773 3,870 Accumulated deficit (552,559) (553,444) ----------- ---------- Total stockholders' equity 814,677 355,028 ----------- ---------- Total liabilities and stockholders' equity $2,130,566 $ 771,832 =========== ========== - ----------------------------------------------------------- ---------- Ending headcount by geographic region is as follows: U.S. headcount 524 442 Asia-pacific headcount 186 174 Europe headcount 164 - ----------- ---------- Total headcount 874 616 =========== ========== EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended Nine Months Ended ------------------------------- ---------------------- September June September September September 30, 30, 30, 30, 30, 2007 2007 2006 2007 2006 ---------- ---------- --------- ----------- ---------- Net cash provided by operating activities $ 48,427 $ 37,862 $ 20,655 $ 106,139 $ 49,553 Net cash used in investing activities (721,257) (181,892) (60,757) (951,206) (121,678) Net cash provided by (used in) financing activities 783,240 50,519 47,461 1,107,012 37,352 Effect of foreign currency exchange rates on cash and cash equivalents (1,556) 449 (20) (1,056) 145 ---------- ---------- --------- ----------- ---------- Net increase (decrease) in cash and cash equivalents 108,854 (93,062) 7,339 260,889 (34,628) Cash and cash equivalents at beginning of period 234,598 327,660 77,300 82,563 119,267 ---------- ---------- --------- ----------- ---------- Cash and cash equivalents at end of period $ 343,452 $ 234,598 $ 84,639 $ 343,452 $ 84,639 ========== ========== ========= =========== ========== 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 $ 343,452 $ 234,598 $ 84,639 $ 343,452 $ 84,639 Short-term investments 64,005 67,728 61,322 64,005 61,322 Long-term investments 28,905 21,640 20,385 28,905 20,385 ---------- ---------- --------- ----------- ---------- Cash, cash equivalents and investments as presented on condensed balance sheet presented herein $ 436,362 $ 323,966 $166,346 $ 436,362 $ 166,346 ========== ========== ========= =========== ========== EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NON-GAAP PRESENTATION (1) (in thousands) (unaudited) Three Months Ended Nine Months Ended ------------------------------- -------------------- September June September September September 30, 30, 30, 30, 30, 2007 2007 2006 2007 2006 ---------- ---------- --------- ---------- --------- Cash flows from operating activities: Net income (loss) $ 4,124 $ 1,217 $ (5,168) $ 885 $(15,508) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and accretion 24,071 22,412 19,586 67,557 55,828 Stock-based compensation 10,489 10,045 6,885 31,032 23,540 Debt issuance costs 812 784 227 1,985 643 Restructuring charges - 407 1,527 407 1,527 Gain on foreign currency hedge (1,494) - - (1,494) - Other reconciling items (529) 138 437 (384) (354) Changes in operating assets and liabilities: Accounts receivable (5,658) (494) (646) (7,068) (6,908) Accounts payable and accrued expenses 17,786 7,950 (1,134) 23,079 470 Accrued restructuring charges (3,203) (3,354) (3,088) (10,100) (9,213) Other assets and liabilities 2,275 (965) 2,029 1,008 (472) ---------- ---------- --------- ---------- --------- Net cash provided by operating activities 48,673 38,140 20,655 106,907 49,553 ---------- ---------- --------- ---------- --------- Cash flows from investing activities: Purchase of IXEurope, less cash acquired (541,729) - - (541,729) - Purchase of Los Angeles IBX property (19) (49,040) - (49,059) - Purchase of San Jose IBX property (64,971) - - (71,471) - Purchase of Chicago IBX property - - - - (9,766) Purchases of other property and equipment (88,921) (139,832) (46,620) (295,809) (102,904) Accrued property and equipment (23,939) 31,425 (3,341) 23,940 2,814 Other investing activities 1,347 - 2 877 8 ---------- ---------- --------- ---------- --------- Net cash used in investing activities (718,232) (157,447) (49,959) (933,251) (109,848) ---------- ---------- --------- ---------- --------- Cash flows from financing activities: Proceeds from stock options and employee stock purchase plans 10,406 6,876 8,180 27,568 28,756 Proceeds from follow-on common stock offering 339,946 - - 339,946 - Proceeds from convertible subordinated notes 395,986 - - 645,986 - Proceeds from loans payable 49,491 44,656 - 118,754 - Proceeds from borrowings under credit line - - 40,000 - 40,000 Repayment of borrowings under credit line - - - - (30,000) Repayment of capital lease and other financing obligations (500) (480) (391) (1,445) (1,130) Repayment of mortgage payable (543) (533) (319) (1,573) (835) Debt issuance costs (11,546) - (253) (22,224) (253) Other financing activities - - 244 - 814 ---------- ---------- --------- ---------- --------- Net cash provided by (used in) financing activities 783,240 50,519 47,461 1,107,012 37,352 ---------- ---------- --------- ---------- --------- Effect of foreign currency exchange rates on cash and cash equivalents (1,285) 355 250 (787) 434 ---------- ---------- --------- ---------- --------- Net increase (decrease) in cash, cash equivalents and investments 112,396 (68,433) 18,407 279,881 (22,509) Cash, cash equivalents and investments at beginning of period 323,966 392,399 147,939 156,481 188,855 ---------- ---------- --------- ---------- --------- Cash, cash equivalents and investments at end of period $ 436,362 $ 323,966 $166,346 $ 436,362 $166,346 ========== ========== ========= ========== ========= Free cash flow (2) $(669,559) $(119,307) $(29,304) $(826,344) $(60,295) ========== ========== ========= ========== ========= Adjusted free cash flow (3) $ (62,840) $ (70,267) $(29,304) $(164,085) $(50,529) ========== ========== ========= ========== ========= - ----------------- (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 $ 48,673 $ 38,140 $ 20,655 $ 106,907 $ 49,553 Net cash used in investing activities as presented above (718,232) (157,447) (49,959) (933,251) (109,848) ---------- ---------- --------- ---------- --------- Free cash flow $(669,559) $(119,307) $(29,304) $(826,344) $(60,295) ========== ========== ========= ========== ========= (3)We define adjusted free cash flow as free cash flow (as defined above) excluding any purchases or sales of real estate and acquisitions as presented below: Free cash flow (as defined above) $(669,559) $(119,307) $(29,304) $(826,344) $(60,295) Less purchase of IXEurope, less cash acquired 541,729 - - 541,729 - Less purchase of Los Angeles IBX property 19 49,040 - 49,059 - Less purchase of San Jose IBX property 64,971 - - 71,471 - Less purchase of Chicago IBX property - - - - 9,766 ---------- ---------- --------- ---------- --------- Adjusted free cash flow $ (62,840) $ (70,267) $(29,304) $(164,085) $(50,529) ========== ========== ========= ========== ========= 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