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Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Equinix, Inc. ("Equinix" or the "Company") and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. The condensed consolidated balance sheet data as of December 31, 2019 has been derived from audited consolidated financial statements as of that date. The condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission ("SEC"), but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For further information, refer to the Consolidated Financial Statements and Notes thereto included in Equinix's Form 10-K as filed with the SEC on February 21, 2020. Results for the interim periods are not necessarily indicative of results for the entire fiscal year.

Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Equinix and its subsidiaries, including the acquisitions of Packet Host, Inc. from March 2, 2020, three data centers in Mexico acquired from Axtel S.A.B. de C.V from January 8, 2020, and Switch Datacenters' AMS1 data center business in Amsterdam, Netherlands from April 18, 2019. All intercompany accounts and transactions have been eliminated in consolidation.

Income Taxes

The Company elected to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") beginning with its 2015 taxable year. As a result, the Company may deduct the distributions made to its stockholders from taxable income generated by the Company and its qualified REIT subsidiaries ("QRSs"). The Company's dividends paid deduction generally eliminates the U.S. federal taxable income of the Company and its QRSs, resulting in no U.S. federal income tax due. However, the Company's domestic taxable REIT subsidiaries ("TRSs") are subject to U.S. corporate income taxes on any taxable income generated by them. In addition, the foreign operations of the Company are subject to local income taxes regardless of whether the foreign operations are operated as QRSs or TRSs.

The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the Company, tax law changes and future business acquisitions.

The Company's effective tax rates were 20.2% and 26.6% for the three months ended March 31, 2020 and 2019, respectively.

Coronavirus (COVID-19) Update

In December 2019, a novel strain of coronavirus, referred to as Coronavirus disease 2019, or COVID-19, emerged. On February 29, 2020, the World Health Organization (“WHO”) raised the COVID-19 threat from high to very high, and on March 11, 2020, the WHO characterized COVID-19 as a global pandemic. The extent to which the Company’s operations will be impacted by COVID-19 will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact, among other things. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from these estimates.

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Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In December 2019, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes. The ASU simplifies accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also improves consistent application of and simplifies generally accepted accounting principles ("GAAP") for other areas of Topic 740 by clarifying and amending existing guidance. For public entities, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted including adoption in any interim period for periods for which financial statements have not yet been issued. The Company is currently evaluating the extent of the impact that the adoption of this standard will have on its condensed consolidated financial statements.

Accounting Standards Adopted

In March 2020, FASB issued ASU 2020-04, Reference Rate Reform ("Topic 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company adopted the ASU upon its issuance and there was no impact on the Company's condensed consolidated financial statements for the three months ended March 31, 2020 as a result of adopting this standard. The Company will evaluate its debt, derivative and lease contracts that are eligible for modification relief and may apply the elections prospectively as needed.

In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses ("Topic 326"): Measurement of Credit Losses on Financial Instruments. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced qualitative and quantitative disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company adopted this new ASU on January 1, 2020 using the modified retrospective approach and recorded a net decrease to retained earnings of $0.9 million and a corresponding increase to allowance for doubtful accounts. The adoption did not have any significant impact on other financial assets within the scope of ASC 326, such as contract asset.

Accounts Receivable

Accounts receivables are recorded at invoice amount and are generally due in less than one year. Allowance for doubtful accounts are estimated losses resulting from the inability of customers making payments. An estimate of uncollectible amounts is made based on historical bad debts, age of customer receivable balances, customers' financial conditions and current economic trends. As of March 31, 2020, our allowance for doubtful accounts considered the current and potential future impacts caused by the COVID-19 pandemic based on information available to such date.

Accounts receivable, net, consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020				December 31, 2019
Accounts receivable	$	701,946			$	702,160
Allowance for doubtful accounts	(14,793		)		(13,026		)
Accounts receivable, net	$	687,153			$	689,134

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The following table summarizes the activity of the Company's allowance for doubtful accounts (in thousands):

Balance at December 31, 2019	$	13,026
Adjustments due to adoption of ASU 2016-13	900
Provision for allowance for doubtful accounts	3,934
Net write-offs and recoveries	(2,688		)
Impact of foreign currency exchange and others	(379		)
Balance at March 31, 2020	$	14,793

Contract Balances

The following table summarizes the opening and closing balances of the Company's accounts receivable, net; contract asset, current; contract asset, non-current; deferred revenue, current; and deferred revenue, non-current (in thousands):

	Accounts receivable, net				Contract asset, current				Contract asset, non-current				Deferred revenue, current				Deferred revenue, non-current
Beginning balances as of January 1, 2020	$	689,134			$	10,033			$	31,521			$	76,193			$	46,555
Closing balances as of March 31, 2020	687,153				10,457				33,619				79,575				48,107
Increase/(decrease)	$	(1,981	)		$	424			$	2,098			$	3,382			$	1,552

The difference between the opening and closing balances of the Company's accounts receivable, net, contract assets and deferred revenues primarily results from revenue growth and the timing difference between the satisfaction of the Company's performance obligation and the customer's payment, as well as business combinations closed during the three months ended March 31, 2020. The amounts of revenue recognized during the three months ended March 31, 2020 from the opening deferred revenue balance as of January 1, 2020 was $38.1 million.

Remaining performance obligations

As of March 31, 2020, approximately $7.2 billion of total revenues including deferred installation revenues are expected to be recognized in future periods, the majority of which will be recognized over the next 24 months. While initial contract terms vary in length, substantially all contracts thereafter automatically renew in one-year increments. Included in the remaining performance obligations is either 1) remaining performance obligations under the initial contract terms or 2) remaining performance obligations related to contracts in the renewal period once the initial terms have lapsed. The remaining performance obligations do not include variable consideration related to unsatisfied performance obligations such as the usage of metered power, service fees from xScale^TM data centers, which are calculated based on future events or actual costs incurred in the future, or any contracts that could be terminated without any significant penalties such as the majority of interconnection revenues. The remaining performance obligations above include revenues to be recognized in the future related to arrangements where the Company is considered the lessor.

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The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the periods presented (in thousands, except per share amounts):

	Three Months Ended March 31,
	2020				2019
Net income	$	118,957			$	117,747
Net (income) loss attributable to non-controlling interests	(165		)		331
Net income attributable to Equinix	$	118,792			$	118,078
Weighted-average shares used to calculate basic EPS	85,551				81,814
Effect of dilutive securities:
Employee equity awards	593				276
Weighted-average shares used to calculate diluted EPS	86,144				82,090
EPS attributable to Equinix:
Basic EPS	$	1.39			$	1.44
Diluted EPS	$	1.38			$	1.44

The Company has excluded common stock related to employee equity awards in the diluted EPS calculation above of approximately 45,000 shares and 469,000 shares for the three months ended March 31, 2020 and 2019, respectively, because their effect would be anti-dilutive.

2020 Acquisitions

On March 2, 2020, the Company acquired all outstanding shares and equity awards of Packet Host, Inc. (“Packet”), a leading bare metal automation platform for a total purchase consideration of approximately $290.3 million in cash. In addition, the Company paid $16.1 million in cash to accelerate the vesting of unvested Packet equity awards for certain Packet employees, which was recorded as stock-based compensation expense during the three months ended March 31, 2020. In connection with the acquisition, the Company also issued restricted stock awards with an aggregated fair value of $30.2 million and a three-year vesting period, which will be recognized as stock-based compensation costs over the vesting period. The acquisition, combined with the Company’s own organic bare metal service in development, is expected to accelerate Equinix's strategy to help enterprises deploy hybrid multicloud architectures on Equinix's data center platform.

On January 8, 2020, the Company completed the acquisition of three data centers in Mexico from Axtel S.A.B. de C.V. (“Axtel”) for a total purchase consideration of approximately $189.0 million, including $175.0 million in cash and $14.0 million the Company paid to the seller for recoverable value-added taxes ("VAT") incurred prior to the acquisition, which related to a corresponding VAT receivable acquired upon acquisition. The acquisition supports the Company’s ongoing expansion to meet customer demand in the Americas region.

Both acquisitions constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under the acquisition method of accounting, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition. As of March 31, 2020, the Company had not completed the detailed valuation analysis to derive the fair value of assets acquired and liabilities assumed, including property, plant and equipment, intangible assets and the related tax impacts; therefore, the purchase price allocation is based on provisional estimates and subject to continuing management analysis.

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A summary of the preliminary allocation of total purchase consideration is presented as follows (in thousands):

	Packet				Axtel
Cash and cash equivalents	$	1,029			$	—
Accounts receivable	5,148				—
Other current assets	108				14,048
Property, plant and equipment	28,980				76,407
Operating lease right-of-use assets	1,445				1,646
Intangible assets	68,600				22,750
Goodwill	223,117				78,902
Other assets	138				—
Total assets acquired	328,565				193,753
Accounts payable and accrued liabilities	(987		)		(238		)
Other current liabilities	(826		)		—
Operating lease liabilities	(1,445		)		(1,586		)
Finance lease liabilities	(28,980		)		—
Other liabilities	—				(162		)
Deferred tax liabilities	(6,029		)		(2,749		)
Net assets acquired	$	290,298			$	189,018

The following table presents certain information on the acquired intangible assets (in thousands):

Intangible Assets		Fair Value				Estimated Useful Lives (Years)		Weighted-average Estimated Useful Lives (Years)
Packet:
Trade names		$	1,600			3.0		3.0
Existing technology		5,100				3.0		3.0
Customer relationships		61,900				10.0		10.0
Axtel:
Customer relationships		22,750				15.0		15.0

The fair value of the Packet trade name was estimated using the relief from royalty method under the income approach. The Company applied a relief from royalty rate of 1.0% and a discount rate of 8.0%. The fair value of existing technology was estimated under the cost approach by projecting the cost to recreate a new asset with an equivalent utility of the existing technology. The key assumptions of the cost approach include total cost, time to recreate and functional obsolescence.

The fair value of customer relationships acquired from Packet and Axtel was estimated by applying an income approach, by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue. The Company applied a discount rate of 8.0% for Packet and 13.3% for Axtel, which reflects the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows, as well as the risk of the country within which the acquired business operates.

The fair value of property, plant and equipment was estimated by applying the cost approach, with the exception of land, which was estimated by applying the market approach. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age.

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Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after the Packet and Axtel acquisitions. Goodwill from both acquisitions is not amortizable for local tax purposes and is attributable to the Company's Americas region.

The Company incurred transaction costs of approximately $9.6 million during the three months ended March 31, 2020 for both acquisitions combined. The operating results of both acquisitions are reported in the Americas region following the date of acquisition. During the three months ended March 31, 2020, the Company's results of operations include $8.1 million of revenues and $13.6 million of net loss from operations from the combined operations of Packet and Axtel. The net loss was primarily attributable to the $16.1 million stock-based compensation expense incurred to accelerate the vesting of certain Packet employees’ unvested Packet equity awards at the close of the Packet acquisition.

2019 Acquisition

5.	Equity Method Investments

On October 8, 2019, the Company entered into a joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund (the "EMEA Joint Venture"), to develop and operate xScale^TM data centers in Europe.  xScale data centers are engineered to meet the technical and operational requirements and price points of core hyperscale workload deployments and also offer access to Equinix's comprehensive suite of interconnection and edge services.

Upon closing, GIC contributed €152.6 million in cash, or $167.4 million at the exchange rate in effect on October 8, 2019, for an 80% partnership interest in the EMEA Joint Venture. Equinix sold certain xScale data center facilities to the EMEA Joint Venture in exchange for net cash proceeds of $351.8 million, as well as a 20% partnership interest in the EMEA Joint Venture with a fair value of $41.9 million. The Company accounts for its investments in the EMEA Joint Venture using the equity method of accounting, whereby the investments were recorded initially at fair value, which equals to the cost of the Company's initial equity contribution, and subsequently adjusted for cash contributions and the Company's share of the income and losses of the investees.

During the three months ended March 31, 2020, the Company made an additional equity contribution of $5.1 million to the EMEA Joint Venture. As of March 31, 2020 and December 31, 2019, the Company's equity method investments were $72.7 million and $59.7 million, respectively, and were included within other assets on the consolidated balance sheet. The Company's share of the income and losses of the equity method investments was not significant for the three months ended March 31, 2020, and was included in other income on the condensed consolidated statement of operations.

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Derivatives Designated as Hedging Instruments

Net Investment Hedges. The Company is exposed to the impact of foreign exchange rate fluctuations on the value of investments in its foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, the Company has entered into various foreign currency debt obligations, which are designated as hedges against the Company's net investments in foreign subsidiaries. As of March 31, 2020 and December 31, 2019, the total principal amounts of foreign currency debt obligations designated as net investment hedges were $4,245.1 million and $4,078.7 million, respectively.

The Company also uses cross-currency interest rate swaps to hedge a portion of its net investment in its European operations. As of both March 31, 2020 and December 31, 2019, U.S. Dollar to Euro cross-currency interest rate swap contracts with a total notional amount of $750.0 million were outstanding, with maturity dates in April 2022, January 2024 and January 2025. At maturity of each outstanding contract, the Company will receive U.S. Dollars from and pay Euros to the contract counterparty. During the term of each contract, the Company receives interest payments in U.S. Dollars and makes interest payments in Euros based on a notional amount and fixed interest rates determined at contract inception.

The effect of net investment hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019 was as follows (in thousands):

Amount of gain or (loss) recognized in accumulated other comprehensive income:
			Three Months Ended March 31,
			2020				2019
Foreign currency debt			$	99,102			$	63,914
Cross-currency interest rate swaps (included component) (1)			14,140				15,515
Cross-currency interest rate swaps (excluded component) (2)			31,704				(2,590		)
Total			$	144,946			$	76,839
Amount of gain or (loss) recognized in earnings:
	Location of gain or (loss)		Three Months Ended March 31,
			2020				2019
Cross-currency interest rate swaps (excluded component) (2)	Interest expense		$	5,089			$	4,163
Total			$	5,089			$	4,163

(1)	Included component represents foreign exchange spot rates.

(2)	Excluded component represents cross-currency basis spread and interest rates.

Cash Flow Hedges. The Company hedges its foreign currency translation exposure for forecasted revenues and expenses in its EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward and option contracts that the Company uses to hedge this exposure are designated as cash flow hedges. As of March 31, 2020 and December 31, 2019, the total notional amounts of these foreign exchange contracts were $985.7 million and $824.8 million, respectively. As of March 31, 2020, the Company's foreign exchange contracts had maturity dates ranging from April 2020 to March 2022 and the Company recorded a net gain of $33.0 million within accumulated other comprehensive income (loss) relating to cash flow hedges that will be reclassified to revenues and expenses as they mature in the next 12 months. As of December 31, 2019, the Company's foreign exchange contracts had maturity dates ranging from January 2020 to December 2021 and the Company recorded a net gain of $16.3 million within accumulated other comprehensive income (loss) relating to cash flow hedges that will be reclassified to revenues and expenses as they mature in the next 12 months.

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The Company hedges the interest rate exposure created by anticipated fixed rate debt issuances through the use of treasury locks and forward starting swaps (collectively, interest rate locks), which are designated as cash flow hedges. As of March 31, 2020, the total notional amount of interest rate locks was approximately $1.2 billion. As of December 31, 2019, the Company had no interest rate cash flow hedges outstanding. When interest rate locks are settled, any accumulated gain or loss included as a component of other comprehensive income (loss) will be amortized to interest expense over the life of the related debt. As of March 31, 2020 and December 31, 2019, the net loss and gain in accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks is not significant.

The Company enters into intercompany hedging instruments ("intercompany derivatives") with wholly-owned subsidiaries of the Company in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, the Company enters into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives.

The effect of cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019 was as follows (in thousands):

Amount of gain or (loss) recognized in accumulated other comprehensive income:
			Three Months Ended March 31,
			2020				2019
Foreign currency forward and option contracts (included component) (1)			$	28,025			$	10,965
Foreign currency option contracts (excluded component) (2)			1,318				—
Interest rate locks			(26,232		)		—
Total			$	3,111			$	10,965
Amount of gain or (loss) reclassified from accumulated other comprehensive income to income:
			Three Months Ended March 31,
	Location of gain or (loss)		2020				2019
Foreign currency forward contracts	Revenues		$	21,219			$	9,861
Foreign currency forward contracts	Costs and operating expenses		(11,000		)		(5,329		)
Interest rate locks	Interest Expense		168				—
Total			$	10,387			$	4,532
Amount of gain or (loss) excluded from effectiveness testing included in income:
			Three Months Ended March 31,
	Location of gain or (loss)		2020				2019
Foreign currency forward contracts	Other income (expense)		$	—			$	88
Foreign currency option contracts (excluded component) (2)	Revenues		(521		)		—
Total			$	(521	)		$	88

(1)	Included component represents foreign exchange spot rates.

(2)	Excluded component represents option's time value.

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Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. The Company is deemed to have foreign currency forward contracts embedded in certain of the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved. These embedded derivatives are separated from their host contracts and carried on the Company's balance sheet at their fair value. The majority of these embedded derivatives arise as a result of the Company's foreign subsidiaries pricing their customer contracts in U.S. Dollars.

Economic Hedges of Embedded Derivatives. The Company uses foreign currency forward contracts to manage the foreign exchange risk associated with the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved ("economic hedges of embedded derivatives"). Foreign currency forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date.

Foreign Currency Forward Contracts. The Company also uses foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of its foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts. As of March 31, 2020 and December 31, 2019, the total notional amounts of these foreign currency contracts were $4.2 billion and $2.5 billion, respectively.

The following table presents the effect of derivatives not designated as hedging instruments in the Company's condensed consolidated statements of operations (in thousands):

Amount of gain or (loss) recognized in earnings:
			Three Months Ended March 31,
	Location of gain or (loss)		2020				2019
Embedded derivatives	Revenues		$	7,451			$	907
Economic hedge of embedded derivatives	Revenues		(7,902		)		(57		)
Foreign currency forward contracts	Other income (expense)		133,824				8,351
Total			$	133,373			$	9,201

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Fair Value of Derivative Instruments

The following table presents the fair value of derivative instruments recognized in the Company's condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020								December 31, 2019
	Assets (1)				Liabilities (2)				Assets (1)				Liabilities (2)
Designated as hedging instruments:
Cash flow hedges
Foreign currency forward and option contracts	$	46,544			$	19			$	24,853			$	5,898
Interest rate locks	4,373				21,295				—				—
Net investment hedges
Cross-currency interest rate swaps	72,095				—				26,251				—
Total designated as hedging	123,012				21,314				51,104				5,898
Not designated as hedging instruments:
Embedded derivatives	10,733				1,102				4,595				2,268
Economic hedges of embedded derivatives	4,507				23				1,367				—
Foreign currency forward contracts	73,939				59,751				641				27,446
Total not designated as hedging	89,179				60,876				6,603				29,714
Total Derivatives	$	212,191			$	82,190			$	57,707			$	35,612

(1)	As presented in the Company's condensed consolidated balance sheets within other current assets and other assets.

(2)	As presented in the Company's condensed consolidated balance sheets within other current liabilities and other liabilities.

Offsetting Derivative Assets and Liabilities

The Company presents its derivative instruments and the accrued interest related to cross-currency interest rate swaps at gross fair values in the condensed consolidated balance sheets. The Company enters into master netting agreements with its counterparties for transactions other than embedded derivatives to mitigate credit risk exposure to any single counterparty. Master netting agreements allow for individual derivative contracts with a single counterparty to offset in the event of default. For presentation on the condensed consolidated balance sheets, the Company does not offset fair value amounts recognized for derivative instruments or the accrued interest related to cross-currency interest rate swaps under master netting arrangements. The following table presents information related to these offsetting arrangements as of March 31, 2020 and December 31, 2019 (in thousands):

	Gross Amounts Offset in Consolidated Balance Sheet
	Gross Amounts				Gross Amounts Offset in the Balance Sheet				Net Amounts				Gross Amounts not Offset in the Balance Sheet				Net
March 31, 2020
Derivative assets	$	224,453			$	—			$	224,453			$	(85,190	)		$	139,263
Derivative liabilities	88,477				—				88,477				(85,190		)		3,287
December 31, 2019
Derivative assets	$	76,640			$	—			$	76,640			$	(37,820	)		$	38,820
Derivative liabilities	45,832				—				45,832				(37,820		)		8,012

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Valuation Methods

Fair value estimates are made as of a specific point in time based on methods using the market approach valuation method which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities or other valuation techniques. These techniques involve uncertainties and are affected by the assumptions used and the judgments made regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows, future expected loss experience and other factors.

Cash Equivalents and Investments. The fair value of the Company's investments in money market funds approximates their face value. Such instruments are included in cash equivalents. The Company's money market funds and publicly traded equity securities are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices for identical instruments in active markets. The fair value of the Company's other investments, including certificates of deposit, approximates their face value. The fair value of these investments is priced based on the quoted market price for similar instruments or nonbinding market prices that are corroborated by observable market data. Such instruments are classified within Level 2 of the fair value hierarchy. The Company determines the fair values of its Level 2 investments by using inputs such as actual trade data, benchmark yields, broker/dealer quotes and other similar data, which are obtained from quoted market prices, custody bank, third-party pricing vendors or other sources. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is responsible for its consolidated financial statements and underlying estimates.

The Company uses the specific identification method in computing realized gains and losses. Realized gains and losses from the sale of investments are included within other income (expense) in the Company's consolidated statements of operations. The Company's investments in publicly traded equity securities are carried at fair value. Unrealized gains and losses on publicly traded equity securities are reported within other income (expense) in the Company's consolidated statements of operations.

Derivative Assets and Liabilities. Inputs used for valuations of derivatives are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data. The significant inputs used include spot currency rates and forward points, interest rate curves, and published credit default swap rates of its foreign exchange trading counterparties and other comparable companies. The Company has determined that the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, therefore the derivatives are categorized as Level 2.

The Company did not have any nonfinancial assets or liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019.

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The Company's financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 were as follows (in thousands):

	Fair Value at March 31, 2020				Fair Value Measurement Using
					Level 1				Level 2
Assets:
Money market and deposit accounts	$	453,349			$	453,349			$	—
Publicly traded equity securities	2,664				2,664				—
Certificates of deposit	23,169				—				23,169
Derivative instruments (1)	212,191				—				212,191
Total	$	691,373			$	456,013			$	235,360
Liabilities:
Derivative instruments (1)	$	82,190			$	—			$	82,190

(1)	Amounts are included within other current assets, other assets, others current liabilities and other liabilities in the Company's accompanying condensed consolidated balance sheet.

The Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 were as follows (in thousands):

	Fair Value at December 31, 2019				Fair Value Measurement Using
					Level 1				Level 2
Assets:
Money market and deposit accounts	$	886,547			$	886,547			$	—
Publicly traded equity securities	2,779				2,779				—
Certificates of deposit	7,583				—				7,583
Derivative instruments (1)	57,707				—				57,707
Total	$	954,616			$	889,326			$	65,290
Liabilities:
Derivative instruments (1)	$	35,612			$	—			$	35,612

(1)	Amounts are included within other current assets, other assets, other current liabilities and other liabilities in the Company's accompanying condensed consolidated balance sheet.

The Company did not have any Level 3 financial assets or financial liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019.

Significant Lease Transactions

Silicon Valley 4 ("SV4") Data Center

In February 2020, the Company exercised its first renewal option available to extend the lease term for the SV4 Data Center for 5 years. After exercising the first renewal option, there are two renewal options of 5 years each remaining. The Company concluded that the two remaining renewal options of 5 years each are reasonably certain to be exercised after considering all relevant factors that create an economic incentive for the Company. Therefore, the concluded lease term is 15 years and 7 months with the lease ending on September 30, 2035. The Company assessed the lease classification of the SV4 lease at the modification date and determined the lease should be accounted for as a finance lease. During the three months ended March 31, 2020, the Company recorded finance lease ROU asset and liability of $62.8 million and $63.3 million, respectively.

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Hong Kong 1 ("HK1") Data Center

In March 2020, the Company entered into several lease agreements with the landlord to lease several premises in the HK1 Data Center. One of the premises commenced in March 2020 with an initial term of 18 years. The Company assessed the lease classification of that premises at the commencement date and determined the lease should be accounted for as a finance lease. The Company will assess the remaining premises when the leases commence. During the three months ended March 31, 2020, the Company recorded finance lease ROU asset and liability of 163.0 million Hong Kong dollars or $21.0 million at the exchange rate in effect on March 31, 2020.

Lease Expenses

The components of lease expenses are as follows (in thousands):

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
Finance lease cost
Amortization of right-of-use assets (1)	$	25,166			$	20,086
Interest on lease liabilities	27,825				27,523
Total finance lease cost	52,991				47,609
Operating lease cost	53,791				51,639
Total lease cost	$	106,782			$	99,248

 

⁽¹⁾ Amortization of right-of-use assets is included with depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations.

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Other Information

Other information related to leases is as follows (in thousands):

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	26,967			$	26,604
Operating cash flows from operating leases	51,985				49,262
Financing cash flows from finance leases	18,977				31,158
Right-of-use assets obtained in exchange for lease obligations: (1)
Finance leases	$	115,274			$	16,307
Operating leases	6,612				28,987
	As of March 31, 2020				As of December 31, 2019
Weighted-average remaining lease term - finance leases (2)	15 years				15 years
Weighted-average remaining lease term - operating leases (2)	13 years				13 years
Weighted-average discount rate - finance leases	8		%		9		%
Weighted-average discount rate - operating leases	4		%		4		%
Finance lease assets (3)	$	1,343,406			$	1,277,614

⁽¹⁾ Represents all non-cash changes in ROU assets.

⁽²⁾ Includes lease renewal options that are reasonably certain to be exercised.

⁽³⁾ As of March 31, 2020 and December 31, 2019, the Company recorded accumulated amortization of finance lease assets of $498.1 million and $474.8 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the condensed consolidated balance sheets.

Maturities of Lease Liabilities

Maturities of lease liabilities as of March 31, 2020 are as follows (in thousands):

	Operating Leases				Finance Leases				Total
2020 (9 months remaining)	$	137,567			$	141,162			$	278,729
2021	190,031				191,679				381,710
2022	182,747				188,362				371,109
2023	167,266				183,177				350,443
2024	155,392				181,116				336,508
Thereafter	1,080,313				1,796,773				2,877,086
Total lease payments	1,913,316				2,682,269				4,595,585
Plus amount representing residual property value	—				17,639				17,639
Less imputed interest	(510,756		)		(1,120,701		)		(1,631,457		)
Total	$	1,402,560			$	1,579,207			$	2,981,767

The Company entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of March 31, 2020. These leases will commence between fiscal years 2020 and 2022, with lease terms of 2 to 49 years and a total lease commitment of approximately $680.8 million.

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Mortgage and Loans Payable

As of March 31, 2020 and December 31, 2019, the Company's mortgage and loans payable consisted of the following (in thousands):

	March 31, 2020				December 31, 2019
Term loans	$	1,219,047			$	1,287,151
Revolving credit facility	250,000				—
Mortgage payable and loans payable	77,236				82,967
	1,546,283				1,370,118
Less amount representing unamortized debt discount and debt issuance cost	(4,330		)		(4,849		)
Add amount representing unamortized mortgage premium	1,715				1,768
	1,543,668				1,367,037
Less current portion	(74,473		)		(77,603		)
Total	$	1,469,195			$	1,289,434

Senior Credit Facility - Revolving Facility

On December 12, 2017, the Company entered into a credit agreement with a group of lenders for a $3,000.0 million credit facility ("Senior Credit Facility"), comprised of a $2,000.0 million senior unsecured multicurrency revolving credit facility ("Revolving Facility") and an approximately $1,000.0 million senior unsecured multicurrency term loan facility. The Revolving Facility allows the Company to borrow, repay and reborrow over its term. The Revolving Facility provides a sublimit for the issuance of letters of credit of up to $250.0 million at any one time.

In March 2020, the Company borrowed a total of $250.0 million under the Revolving Facility, which remained outstanding as of March 31, 2020. In addition, the Company had 41 irrevocable letters of credit totaling $76.1 million issued and outstanding under the Revolving Facility as of March 31, 2020. As a result, the amount available to the Company to borrow under the Revolving Facility was approximately $1.7 billion as of March 31, 2020.

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Senior Notes

As of March 31, 2020 and December 31, 2019, the Company's senior notes consisted of the following (in thousands):

	March 31, 2020							December 31, 2019
	Amount				Effective Rate			Amount				Effective Rate
5.000% Infomart Senior Notes (1)	$	450,000			4.46	%		$	450,000			4.46	%
5.375% Senior Notes due 2022	—				—	%		343,711				5.56	%
2.625% Senior Notes due 2024	1,000,000				2.79	%		1,000,000				2.79	%
2.875% Euro Senior Notes due 2024	825,300				3.08	%		841,500				3.08	%
2.875% Euro Senior Notes due 2025	1,100,400				3.04	%		1,122,000				3.04	%
2.900% Senior Notes due 2026	600,000				3.04	%		600,000				3.04	%
5.875% Senior Notes due 2026	1,100,000				6.03	%		1,100,000				6.03	%
2.875% Euro Senior Notes due 2026	1,100,400				3.04	%		1,122,000				3.04	%
5.375% Senior Notes due 2027	1,250,000				5.51	%		1,250,000				5.51	%
3.200% Senior Notes due 2029	1,200,000				3.30	%		1,200,000				3.30	%
	8,626,100							9,029,211
Less amount representing unamortized debt issuance cost	(73,075		)					(78,030		)
Add amount representing unamortized debt premium	1,121							1,716
	8,554,146							8,952,897
Less current portion	(300,401		)					(643,224		)
Total	$	8,253,745						$	8,309,673

 

⁽¹⁾ 5.000% Infomart Senior Notes consist of three tranches due in each of April 2020, October 2020 and April 2021. The effective rate represents the weighted-average effective interest rates of the tranches outstanding at the periods presented in the table above.

On January 2, 2020, the Company redeemed the remaining $343.7 million principal amount of the 5.375% Senior Notes due 2022. In connection with the redemption, the Company incurred $5.9 million of loss on debt extinguishment, including $4.6 million redemption premium that was paid in cash and $1.3 million related to the write-off of unamortized debt issuance costs.

Maturities of Debt Instruments

The following table sets forth maturities of the Company's debt, including mortgage and loans payable, and senior notes, gross of debt issuance costs, debt discounts and debt premiums, as of March 31, 2020 (in thousands):

Years ending:
2020 (9 months remaining)	$	355,962
2021	224,507
2022	1,383,505
2023	6,357
2024	1,831,174
Thereafter	6,372,592
Total	$	10,174,097

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Fair Value of Debt Instruments

The following table sets forth the estimated fair values of the Company's mortgage and loans payable and senior notes, including current maturities, as of (in thousands):

	March 31, 2020				December 31, 2019
Mortgage and loans payable	$	1,557,789			$	1,378,429
Senior notes	8,366,223				9,339,497

The fair values of the mortgage and loans payable and 5.000% Infomart Senior Notes, which are not publicly traded, were estimated by considering the Company's credit rating, current rates available to the Company for debt of the same remaining maturities and terms of the debt (Level 2). The fair value of the senior notes, which are traded in the public debt market, was based on quoted market prices (Level 1).

Interest Charges

The following table sets forth total interest costs incurred and total interest costs capitalized for the periods presented (in thousands):

	Three Months Ended March 31,
	2020				2019
Interest expense	$	107,338			$	122,846
Interest capitalized	6,031				9,854
Interest charges incurred	$	113,369			$	132,700

Total interest paid, net of capitalized interest, during the three months ended March 31, 2020 and 2019 was $119.9 million and $136.3 million, respectively.

Purchase Commitments

As a result of the Company's various IBX data center expansion projects, as of March 31, 2020, the Company was contractually committed for approximately $0.9 billion of unaccrued capital expenditures, primarily for IBX infrastructure equipment not yet delivered and labor not yet provided, in connection with the work necessary to open these IBX data centers and make them available to customers for installation. The Company also had numerous other, non-capital purchase commitments in place as of March 31, 2020, such as commitments to purchase power in select locations through the remainder of 2020 and thereafter, and other open purchase orders for goods or services to be delivered or provided during the remainder of 2020 and thereafter. Such other miscellaneous purchase commitments totaled approximately $1.1 billion as of March 31, 2020. In addition, the Company entered into lease agreements in various locations that have not yet commenced as of March 31, 2020. For further information on lease commitments, see Note 8 above.

Equity Contribution Commitments

In connection with the EMEA Joint Venture closed in October 2019, the Company agreed to make future equity contributions to the EMEA Joint Venture. As of March 31, 2020, the Company had future equity contribution commitments of €16.1 million and £13.1 million, or $33.9 million in total at the exchange rate in effect on March 31, 2020.

Contingent Liabilities

The Company estimates exposure on certain liabilities, such as indirect and property taxes, based on the best information available at the time of determination. With respect to real and personal property taxes, the Company

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records what it can reasonably estimate based on prior payment history, assessed value by the assessor's office, current landlord estimates or estimates based on current or changing fixed asset values in each specific municipality, as applicable. However, there are circumstances beyond the Company's control whereby the underlying value of the property or basis for which the tax is calculated on the property may change, such as a landlord selling the underlying property of one of the Company's IBX data center leases or a municipality changing the assessment value in a jurisdiction and, as a result, the Company's property tax obligations may vary from period to period. Based upon the most current facts and circumstances, the Company makes the necessary property tax accruals for each of its reporting periods. However, revisions in the Company's estimates of the potential or actual liability could materially impact the financial position, results of operations or cash flows of the Company.

The Company's indirect and property tax filings in various jurisdictions are subject to examination by local tax authorities. Although we believe that we have adequately assessed and accounted for our potential tax liabilities, and that our tax estimates are reasonable, there can be no certainty that additional taxes will not be due upon audit of our tax returns or as a result of further changes to the tax laws and interpretations thereof. For example, we are currently undergoing audits and appealing the tentative assessments in a number of jurisdictions where we operate, such as France and Brazil. The final results of these audits and the outcomes of the appeals are uncertain and may not be resolved in our favor. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations and appeals that would affect the adequacy of its tax accruals for each of the reporting periods. If any issues arising from the tax examinations and appeals are resolved in a manner inconsistent with the Company's expectations, the revision of the estimates of the potential or actual liabilities could materially impact the financial position, results of operations, or cash flows of the Company.

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Stockholders' Equity Rollforward

The following tables provide a rollforward of stockholders' equity for the three months ended March 31, 2020 and 2019 (in thousands):

																							AOCI (Loss)				Retained Earnings				Equinix Stockholders' Equity				Non-controlling Interests				Total Stockholders' Equity
	Common Stock							Treasury Stock							Additional Paid-in Capital				Accumulated Dividends
	Shares			Amount				Shares			Amount
Balance as of December 31, 2019	85,700,953			$	86			(392,567	)		$	(144,256	)		$	12,696,433			$	(4,168,469	)		$	(934,613	)		$	1,391,425			$	8,840,606			$	(224	)		$	8,840,382
Adjustment from adoption of new accounting standard update	—			—				—			—				—				—				—				(900		)		(900		)		—				(900		)
Net income	—			—				—			—				—				—				—				118,792				118,792				165				118,957
Other comprehensive loss	—			—				—			—				—				—				(272,056		)		—				(272,056		)		(11		)		(272,067		)
Issuance of common stock and release of treasury stock for employee equity awards	405,550			—				50,594			16,958				13,432				—				—				—				30,390				—				30,390
Issuance of common stock under ATM Program	162,530			—				—			—				101,791				—				—				—				101,791				—				101,791
Dividend distribution on common stock, $2.66 per share	—			—				—			—				—				(227,387		)		—				—				(227,387		)		—				(227,387		)
Settlement of accrued dividends on vested equity awards	—			—				—			—				109				(403		)		—				—				(294		)		—				(294		)
Accrued dividends on unvested equity awards	—			—				—			—				—				(3,268		)		—				—				(3,268		)		—				(3,268		)
Stock-based compensation, net of estimated forfeitures	—			—				—			—				81,690				—				—				—				81,690				—				81,690
Balance as of March 31, 2020	86,269,033			$	86			(341,973	)		$	(127,298	)		$	12,893,455			$	(4,399,527	)		$	(1,206,669	)		$	1,509,317			$	8,669,364			$	(70	)		$	8,669,294

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															Additional Paid-in Capital				Accumulated Dividends				AOCI (Loss)				Retained Earnings				Equinix Stockholders' Equity				Non-controlling interests				Total Stockholders' Equity
	Common Stock							Treasury Stock
	Shares			Amount				Shares			Amount
Balance as of December 31, 2018	81,119,117			$	81			(396,859	)		$	(145,161	)		$	10,751,313			$	(3,331,200	)		$	(945,702	)		$	889,948			$	7,219,279			$	—			$	7,219,279
Adjustment from adoption of new accounting standard update	—			—				—			—				—				—				—				(5,973		)		(5,973		)		—				(5,973		)
Net income (loss)	—			—				—			—				—				—				—				118,078				118,078				(331		)		117,747
Other comprehensive income	—			—				—			—				—				—				3,337				—				3,337				7				3,344
Issuance of common stock and release of treasury stock for employee equity awards	360,464			—				1,706			360				27,233				—				—				—				27,593				—				27,593
Issuance of common stock for equity offering	2,985,575			3				—			—				1,213,431				—				—				—				1,213,434				—				1,213,434
Dividend distribution on common stock, $2.46 per share	—			—				—			—				—				(198,933		)		—				—				(198,933		)		—				(198,933		)
Settlement of accrued dividends on vested equity awards	—			—				—			—				284				(387		)		—				—				(103		)		—				(103		)
Accrued dividends on unvested equity awards	—			—				—			—				—				(2,395		)		—				—				(2,395		)		—				(2,395		)
Stock-based compensation, net of estimated forfeitures	—			—				—			—				50,795				—				—				—				50,795				—				50,795
Balance as of March 31, 2019	84,465,156			$	84			(395,153	)		$	(144,801	)		$	12,043,056			$	(3,532,915	)		$	(942,365	)		$	1,002,053			$	8,425,112			$	(324	)		$	8,424,788

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Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):

	Balance as of December 31, 2019				Net Change				Balance as of March 31, 2020
Foreign currency translation adjustment ("CTA") loss	$	(1,056,918	)		$	(413,781	)		$	(1,470,699	)
Unrealized gain on cash flow hedges (1)	15,638				(3,256		)		12,382
Net investment hedge CTA gain (1)	107,619				144,946				252,565
Net actuarial loss on defined benefit plans (2)	(952		)		35				(917		)
Accumulated other comprehensive loss attributable to Equinix	$	(934,613	)		$	(272,056	)		$	(1,206,669	)

 

(1)	Refer to Note 6 for a discussion of the amounts reclassified from accumulated other comprehensive loss to net income.

(2)

The Company has a defined benefit pension plan covering all employees in one country where such plan is mandated by law. The Company does not have any defined benefit plans in any other countries. The unamortized gain (loss) on defined benefit plans includes gains or losses resulting from a change in the value of either the projected benefit obligation or the plan assets resulting from a change in an actuarial assumption, net of amortization.

Changes in foreign currencies can have a significant impact to the Company's consolidated balance sheets (as evidenced above in the Company's foreign currency translation loss), as well as its consolidated results of operations, as amounts in foreign currencies are generally translated into more U.S. Dollars when the U.S. Dollar weakens or fewer U.S. Dollars when the U.S. Dollar strengthens. As of March 31, 2020, the U.S. Dollar was generally stronger relative to certain of the currencies of the foreign countries in which the Company operates as compared to December 31, 2019. This overall strengthening of the U.S. Dollar had an overall unfavorable impact on the Company's condensed consolidated financial position because the foreign denominations translated into fewer U.S. Dollars as evidenced by an increase in foreign currency translation loss for the three months ended March 31, 2020 as reflected in the above table. The volatility of the U.S. Dollar as compared to the other currencies in which the Company operates could have a significant impact on its condensed consolidated financial position and results of operations including the amount of revenue that the Company reports in future periods.

Common Stock

In March 2019, the Company issued and sold 2,985,575 shares of common stock in a public offering pursuant to a registration statement and a related prospectus and prospectus supplement. The Company received net proceeds of approximately $1,213.4 million, net of underwriting discounts, commissions and offering expenses.

In December 2018, the Company launched an ATM program, under which it may offer and sell from time to time up to an aggregate of $750.0 million of its common stock in "at the market" transactions (the "ATM Program"). For the three months ended March 31, 2020, the Company sold 162,530 shares under the ATM Program, for approximately $101.8 million, net of payment of commissions to sales agents and other offering expenses. During the quarter ended March 31, 2019, no sales were made under the ATM Program.

Stock-Based Compensation

For the three months ended March 31, 2020, the Compensation Committee and/or the Stock Award Committee of the Company's Board of Directors, as the case may be, approved the issuance of an aggregate of 653,281 shares of restricted stock units to certain employees, including executive officers, pursuant to the 2000 Equity Incentive Plan. These equity awards are subject to vesting provisions and have a weighted-average grant date fair value of $579.24 and a weighted-average requisite service period of 3.31 years. The valuation of restricted stock units with only a service condition or a service and performance condition requires no significant assumptions as the fair value for these types of equity awards is based solely on the fair value of the Company's stock price on the date of grant. The Company used revenues and adjusted funds from operations ("AFFO") per share as the performance measurements in the restricted stock units with both service and performance conditions that were granted in the three months ended March 31, 2020.

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The Company uses a Monte Carlo simulation option-pricing model to determine the fair value of restricted stock units with a service and market condition. The Company used total shareholder return ("TSR") as the performance measurement in the restricted stock units with a service and market condition that were granted in the three months ended March 31, 2020. There were no significant changes in the assumptions used to determine the fair value of restricted stock units with a service and market condition that were granted in 2020 compared to the prior year.

The following table presents, by operating expense category, the Company's stock-based compensation expense recognized in the Company's condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31,
	2020				2019
Cost of revenues	$	9,343			$	5,012
Sales and marketing	18,545				13,301
General and administrative	52,678				30,710
Total	$	80,566			$	49,023

While the Company has a single line of business, which is the design, build-out and operation of IBX data centers, it has determined that it has three reportable segments comprised of its Americas, EMEA and Asia-Pacific geographic regions. The Company's chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on the Company's revenues and adjusted EBITDA performance both on a consolidated basis and based on these three reportable segments.

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The following tables present revenue information disaggregated by product lines and geographic areas (in thousands):

	Three Months Ended March 31, 2020
	Americas				EMEA				Asia-Pacific				Total
Colocation (1)	$	450,954			$	362,330			$	221,093			$	1,034,377
Interconnection	150,929				48,541				42,671				242,141
Managed infrastructure	25,529				30,137				21,824				77,490
Other (1)	5,220				2,466				—				7,686
Recurring revenues	632,632				443,474				285,588				1,361,694
Non-recurring revenues	29,273				35,435				18,140				82,848
Total	$	661,905			$	478,909			$	303,728			$	1,444,542

⁽¹⁾ Includes some leasing and hedging activities.

	Three Months Ended March 31, 2019
	Americas				EMEA				Asia-Pacific				Total
Colocation (1)	$	439,981			$	331,125			$	209,665			$	980,771
Interconnection	138,563				37,525				36,696				212,784
Managed infrastructure	21,787				29,088				21,920				72,795
Other (1)	5,979				2,499				—				8,478
Recurring revenues	606,310				400,237				268,281				1,274,828
Non-recurring revenues	38,056				34,423				15,911				88,390
Total	$	644,366			$	434,660			$	284,192			$	1,363,218

⁽¹⁾ Includes some leasing and hedging activities.

No single customer accounted for 10% or greater of the Company's accounts receivable or revenues for the three months ended March 31, 2020 and 2019.

The Company defines adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales as presented below (in thousands):

	Three Months Ended March 31,
	2020				2019
Adjusted EBITDA:
Americas	$	293,613			$	307,838
EMEA	230,158				199,072
Asia-Pacific	160,439				153,245
Total adjusted EBITDA	684,210				660,155
Depreciation, amortization and accretion expense	(337,431		)		(314,705		)
Stock-based compensation expense	(80,566		)		(49,023		)
Impairment charges	—				(14,448		)
Transaction costs	(11,530		)		(2,471		)
Loss on asset sales	(1,199		)		—
Income from operations	$	253,484			$	279,508

 

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The Company also provides the following additional segment disclosures (in thousands):

	Three Months Ended March 31,
	2020				2019
Depreciation and amortization:
Americas	$	171,074			$	166,770
EMEA	92,374				84,165
Asia-Pacific	72,421				62,243
Total	$	335,869			$	313,178
Capital expenditures:
Americas	$	184,401			$	144,495
EMEA	122,128				164,355
Asia-Pacific	94,412				55,117
Total	$	400,941			$	363,967

The Company's long-lived assets, including property, plant and equipment, net and operating lease right-of-use assets, located in the following geographic areas as of (in thousands):

	March 31, 2020				December 31, 2019
Americas	$	5,542,288			$	5,400,287
EMEA	4,005,962				4,051,701
Asia-Pacific	2,628,794				2,700,609
Total Property, plant and equipment, net	$	12,177,044			$	12,152,597
Americas	$	374,778			$	387,598
EMEA	495,554				521,129
Asia-Pacific	544,379				566,640
Total Operating lease right-of-use assets	$	1,414,711			$	1,475,367

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On April 15, 2020, the Company entered into a credit agreement which provides for senior unsecured 364-day term loan facilities in an aggregate principal amount of $750.0 million, comprised of $500.0 million available to be borrowed on the closing date (the "Closing Date Facility") and $250.0 million available to be borrowed on or prior to July 14, 2020 (the "Delayed Draw Facility"). On April 15, 2020, Equinix borrowed $391.0 million, as well as €100.0 million or $109.8 million at the exchange rate in effect on that date, under the Closing Date Facility. Borrowings under these term loan facilities must be repaid in full on or prior to April 14, 2021.

On April 18, 2020, the Company entered into an agreement to form a second joint venture in the form of a limited liability partnership with GIC to develop and operate xScale data centers in Asia-Pacific (the “Asia-Pacific Joint Venture”). Upon closing, GIC will contribute cash in exchange for an 80% partnership interest in the Asia-Pacific Joint Venture. The Company will contribute three development sites in Japan to the Asia-Pacific Joint Venture in exchange for a 20% partnership interest in the Asia-Pacific Joint Venture and cash proceeds. The completion of the Asia-Pacific Joint Venture is subject to closing conditions.

On May 6, 2020, the Company repaid a total of $250.0 million under the Revolving Facility, which was outstanding as of March 31, 2020. As a result, the amount available to the Company to borrow under the Revolving Facility was approximately $1.9 billion after the repayment.

On May 6, 2020, the Company declared a quarterly cash dividend of $2.66 per share, which is payable on June 17, 2020 to the Company's common stockholders of record as of the close of business on May 20, 2020.

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•	Overview

•	Results of Operations

•	Non-GAAP Financial Measures

•	Liquidity and Capital Resources

•	Contractual Obligations and Off-Balance-Sheet Arrangements

•	Critical Accounting Policies and Estimates

•	Recent Accounting Pronouncements

•	premium data center colocation;

•	interconnection and data exchange solutions;

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•	edge services for deploying networking, security and hardware; and

•	remote expert support and professional services.

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•	In January, we redeemed the remaining $343.7 million principal amount of the 5.375% Senior Notes due 2022. See Note 9 within the Condensed Consolidated Financial Statements.

•	In January, we completed the acquisition of three data centers in Mexico from Axtel S.A.B. de C.V. (“Axtel”) for a total purchase consideration of approximately $189.0 million. See Note 4 within the Condensed Consolidated Financial Statements.

•	In March, we completed the acquisition of Packet Host, Inc. (“Packet”), a leading bare metal automation platform for a total cash purchase price of approximately $290.3 million. See Note 4 within the Condensed Consolidated Financial Statements.

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In March 2020, we borrowed a total of $250.0 million under our Revolving Facility. As of March 31, 2020, we had an additional $1.7 billion available for borrowing under our Revolving Facility. In May, we repaid the $250.0 million outstanding under our Revolving Facility. As a result, the amount available to borrow under the Revolving Facility was approximately $1.9 billion after the repayment. See Note 9 and Note 13 within the Condensed Consolidated Financial Statements.

•	During the three months ended March 31, 2020, we sold 162,530 shares of common stock for approximately $101.8 million in proceeds, net of payment of commissions to the sales agents, under our ATM program. See Note 11 within the Condensed Consolidated Financial Statements.

•	In April, we entered into a credit agreement which provides for senior unsecured 364-day term loan facilities in an aggregate principal amount of $750.0 million. On April 15, 2020, we borrowed $391.0 million, as well as €100.0 million or $109.8 million at the exchange rate in effect on that date. See Note 13 within the Condensed Consolidated Financial Statements.

•	In April, we entered into an agreement to form a second joint venture in the form of a limited liability partnership with GIC to develop and operate xScale data centers in Asia-Pacific (the “Asia-Pacific Joint Venture”). See Note 13 within the Condensed Consolidated Financial Statements.

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•	approximately $8.1 million of incremental revenues from the Packet and Axtel acquisitions;

•	$7.0 million of incremental revenues generated from our recently-opened IBX data centers or IBX data center expansions; and

•	an increase in orders from both our existing customers and new customers during the period.

•	$8.8 million of lower non-recurring revenues, primarily due to a decrease in equipment resale activities.

•	approximately $22.7 million of incremental revenues generated from our recently-opened IBX data centers or IBX data center expansions;

•	an increase in orders from both our existing customers and new customers during the period; and

•	a net increase of $10.8 million of realized cash flow hedge gains from foreign currency forward contracts.

•	approximately $7.9 million of incremental revenues generated from our recently-opened IBX data centers or IBX data center expansions; and

•	an increase in orders from both our existing customers and new customers during the period.

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•	approximately $8.5 million of incremental cost of revenues from the Packet and Axtel acquisitions; and

•	$6.1 million of higher compensation costs, including salaries, bonuses and stock-based compensation, primarily due to headcount growth and additional bonuses paid to IBX employees for supporting our business during the COVID-19 pandemic.

•	$5.2 million of lower costs from decreased equipment resale activities, primarily in the U.S.

•	$10.8 million of higher depreciation expenses driven by IBX data center expansions in London and Frankfurt;

•	$6.6 million of higher compensation costs, including salaries, bonuses and stock-based compensation, primarily due to headcount growth and additional bonuses to IBX employees for supporting our business during the COVID-19 pandemic;

•	$6.0 million of higher utilities costs driven by increased utility usage to support IBX data center expansions and utility price increases, primarily in Germany, France and the Netherlands;

•	a net increase of $4.2 million of realized cash flow hedge losses from foreign currency forward contracts; and

•	$3.9 million of higher rent and facilities costs and repairs and maintenance expense.

•	$6.9 million of lower costs from decreased equipment resale activities, primarily in Germany and Sweden.

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•	$10.5 million of higher depreciation expense, primarily from IBX data center expansions in Singapore, Japan, and Australia;

•	$3.8 million of higher utilities costs and rent and facility costs, primarily driven by expansions and higher utility usage in Hong Kong and Singapore; and

•	$3.3 million of higher compensation costs, including salaries, bonuses and stock-based compensation, primarily due to headcount growth and additional bonuses to IBX employees for supporting our business during the COVID-19 pandemic.

•	$6.7 million of higher compensation costs, including sales compensation, salaries and stock-based compensation, primarily due to additional stock-based compensation expenses incurred related to the Packet acquisition and headcount growth; and

•	$3.4 million of higher advertising and promotions expenses.

•	$1.0 million of lower travel and entertainment expenses.

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•	$29.2 million of higher compensation costs, including salaries, bonuses and stock-based compensation, primarily due to additional stock-based compensation expense incurred related to the Packet acquisition, higher payroll taxes, higher corporate bonus payment and overall headcount growth;

•	$6.1 million of higher consulting expenses in support of our business growth;

•	$4.5 million of higher office expenses due to additional software and support services; and

•	$3.6 million of higher depreciation expense associated with the implementation of certain systems to support the integration and growth of our business.

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•	a net decrease of $6.4 million in other operating expenses due to the favorable determination of a legal claim.

•	$2.1 million of higher compensation costs, including salaries, bonuses and stock-based compensation, primarily due to headcount growth.

•	$2.7 million of higher compensation costs, including salaries, bonuses and stock-based compensation, primarily due to headcount growth.

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•	$8,626.1 million of principal from our senior notes;

•	Approximately $1,579.2 million from our finance lease liabilities; and

•	$1,548.0 million of principal from our mortgage and loans payable, including borrowings under our revolving credit facility (gross of debt issuance cost, debt discount, plus mortgage premium).

•	Issued and sold 162,530 shares of common stock under our ATM Program, for proceeds of approximately $101.8 million, net of payment of commissions and other offering expenses;

•	Borrowed $250.0 million under our revolving credit facility; and

•	Redeemed the remaining $343.7 million principal amount of our 5.375% Senior Notes due 2022.

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•	borrowing under the revolving credit facility of $250.0 million;

•	the sale of 162,530 shares of common stock under the ATM Program, for net proceeds of $101.8 million; and

•	proceeds from the employee stock purchase plan of $30.4 million.

•	dividend distributions of $233.5 million;

•	the repayment of senior notes of $343.7 million;

•	repayments of finance lease liabilities of $19.0 million; and

•	repayments of mortgage and loans payable of $18.5 million.

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•	the sale of 2,985,575 shares of common stock in a public equity offering for net proceeds of approximately $1,213.4 million; and

•	proceeds from employee awards of $27.6 million.

•	dividend distributions of $204.6 million;

•	repayments of finance lease liabilities of $31.2 million; and

•	repayments of mortgage and loans payable of $18.3 million.

(1)	Represents principal and unamortized mortgage premium only.

(2)	Represents interest on mortgage payable, loans payable, senior notes and term loans based on their respective interest rates as of March 31, 2020, as well as the credit facility fee for the revolving credit facility.

(3)	Represents lease payments under finance and operating lease arrangements, including renewal options that are certain to be exercised.

(4)	Represents off-balance sheet arrangements. Other contractual commitments are described below.

(5)	Represents liability, net of future accretion expense.

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•	construction delays;

•	lack of availability and delays for data center equipment, including items such as generators and switchgear;

•	unexpected budget changes;

•	increased prices for and delays in obtaining building supplies, raw materials and data center equipment;

•	labor availability, labor disputes and work stoppages with contractors, subcontractors and other third parties, including interruptions in work due to the COVID-19 pandemic;

•	unanticipated environmental issues and geological problems;

•	delays related to permitting from public agencies and utility companies; and

•	delays in site readiness leading to our failure to meet commitments made to customers planning to expand into a new build.

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•	the possible disruption of our ongoing business and diversion of management's attention by acquisition, transition and integration activities, particularly when multiple acquisitions and integrations are occurring at the same time;

•	our potential inability to successfully pursue or realize some or all of the anticipated revenue opportunities associated with an acquisition or investment;

•	the possibility that we may not be able to successfully integrate acquired businesses, or businesses in which we invest, or achieve anticipated operating efficiencies or cost savings;

•	the possibility that announced acquisitions may not be completed, due to failure to satisfy the conditions to closing as a result of:

◦	an injunction, law or order that makes unlawful the consummation of the acquisition;

◦	inaccuracy or breach of the representations and warranties of, or the non-compliance with covenants by, either party;

◦	the nonreceipt of closing documents; or

◦	for other reasons;

•	the possibility that there could be a delay in the completion of an acquisition, which could, among other things, result in additional transaction costs, loss of revenue or other negative effects resulting from uncertainty about completion of the respective acquisition;

•	the dilution of our existing stockholders as a result of our issuing stock as consideration in a transaction or selling stock in order to fund the transaction;

•	the possibility of customer dissatisfaction if we are unable to achieve levels of quality and stability on par with past practices;

•	the possibility that we will be unable to retain relationships with key customers, landlords and/or suppliers of the acquired businesses, some of which may terminate their contracts with the acquired business as a result of the acquisition or which may attempt to negotiate changes in their current or future business relationships with us;

•	the possibility that we could lose key employees from the acquired businesses before integrating them;

•	the possibility that we may be unable to integrate or migrate IT systems, which could create a risk of errors or performance problems and could affect our ability to meet customer service level obligations;

•	the potential deterioration in our ability to access credit markets due to increased leverage;

•	the possibility that our customers may not accept either the existing equipment infrastructure or the "look-and-feel" of a new or different IBX data center;

•	the possibility that additional capital expenditures may be required or that transaction expenses associated with acquisitions may be higher than anticipated;

•	the possibility that required financing to fund an acquisition may not be available on acceptable terms or at all;

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the possibility that we may be unable to obtain required approvals from governmental authorities under antitrust and competition laws on a timely basis or at all, which could, among other things, delay or prevent us from completing an acquisition, limit our ability to realize the expected financial or strategic benefits of an acquisition or have other adverse effects on our current business and operations;

•	the possible loss or reduction in value of acquired businesses;

•	the possibility that future acquisitions may present new complexities in deal structure, related complex accounting and coordination with new partners, particularly in light of our desire to maintain our qualification for taxation as a REIT;

•	the possibility that we may not be able to prepare and issue our financial statements and other public filings in a timely and accurate manner, and/or maintain an effective control environment, due to the strain on the finance organization when multiple acquisitions and integrations are occurring at the same time;

•	the possibility that future acquisitions may trigger property tax reassessments resulting in a substantial increase to our property taxes beyond that which we anticipated;

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•	the possibility that future acquisitions may be in geographies and regulatory environments to which we are unaccustomed and we may become subject to complex requirements and risks with which we have limited experience;

•	the possibility that carriers may find it cost-prohibitive or impractical to bring fiber and networks into a new IBX data center;

•	the possibility of litigation or other claims in connection with, or as a result of, an acquisition, including claims from terminated employees, customers, former stockholders or other third parties;

•	the possibility that asset divestments may be required in order to obtain regulatory clearance for a transaction;

•	the possibility of pre-existing undisclosed liabilities, including, but not limited to, lease or landlord related liability, tax liability, environmental liability or asbestos liability, for which insurance coverage may be insufficient or unavailable, or other issues not discovered in the diligence process; and

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the possibility that we receive limited or incorrect information about the acquired business in the diligence process, particularly in light of the travel bans and other restrictions imposed due to COVID-19. Additionally, we sometimes do not receive all of the customer contracts associated with our acquisitions in the diligence process, which affects our visibility into customer termination rights and could expose us to additional liabilities.

•	certain financing conditions, including the fulfilment by each of Equinix and GIC of their funding obligations and obtaining certain external financing arrangements;

•	completion of pre-closing reorganization; and

•	obtaining required regulatory approvals.

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•	we may not have the right to exercise sole decision-making authority regarding the properties, partnership, joint venture or other entity;

•	if our partners become bankrupt or fail to fund their share of required capital contributions, we may choose to or be required to contribute such capital;

•	our partners may have economic, tax or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives;

•	our joint venture partners may take actions that are not within our control, which could require us to dispose of the joint venture asset, transfer it to a TRS in order for Equinix to maintain its qualification for taxation as a REIT, or purchase the partner's interests or assets at an above-market price;

•	our joint venture partners may take actions unrelated to our business agreement but which reflect poorly on Equinix because of our joint venture;

•	disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our management from focusing their time and effort on our day-to-day business; and

•	we may in certain circumstances be liable for the actions of our third-party partners or guarantee all or a portion of the joint venture's liabilities, which may require the company to pay an amount greater than its investment in the joint venture.

•	require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt and in respect of other off-balance sheet arrangements, reducing the availability of our

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•	increase the likelihood of negative outlook from our credit rating agencies, or of a downgrade to our current rating;

•	make it more difficult for us to satisfy our obligations under our various debt instruments;

•	increase our cost of borrowing and even limit our ability to access additional debt to fund future growth;

•	increase our vulnerability to general adverse economic and industry conditions and adverse changes in governmental regulations;

•	limit our flexibility in planning for, or reacting to, changes in our business and industry, which may place us at a competitive disadvantage compared with our competitors;

•	limit our operating flexibility through covenants with which we must comply;

•	limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity, which would also limit our ability to further expand our business; and

•	make us more vulnerable to increases in interest rates because of the variable interest rates on some of our borrowings to the extent we have not entirely hedged such variable rate debt.

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•	the costs of customizing IBX data centers for foreign countries;

•	protectionist laws and business practices favoring local competition;

•	greater difficulty or delay in accounts receivable collection;

•	difficulties in staffing and managing foreign operations, including negotiating with foreign labor unions or workers' councils;

•	difficulties in managing across cultures and in foreign languages;

•	political and economic instability;

•	fluctuations in currency exchange rates;

•	difficulties in repatriating funds from certain countries;

•	our ability to obtain, transfer or maintain licenses required by governmental entities with respect to our business;

•	unexpected changes in regulatory, tax and political environments such as the United Kingdom's withdrawal from the European Union ("Brexit");

•	our ability to secure and maintain the necessary physical and telecommunications infrastructure;

•	compliance with anti-bribery and corruption laws;

•	compliance with economic and trade sanctions enforced by the Office of Foreign Assets Control of the U.S. Department of Treasury;

•	compliance with evolving governmental regulation with which we have little experience; and

•	compliance with evolving and varied regulations related to the COVID-19 pandemic.

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•	news or regulations regarding the COVID-19 pandemic;

•	our operating results or forecasts;

•	new issuances of equity, debt or convertible debt by us, including issuances through our ATM Program;

•	increases in market interest rates and changes in other general market and economic conditions, including inflationary concerns;

•	changes to our capital allocation, tax planning or business strategy;

•	our qualification for taxation as a REIT and our declaration of distributions to our stockholders;

•	changes in U.S. or foreign tax laws;

•	changes in management or key personnel;

•	developments in our relationships with customers;

•	announcements by our customers or competitors;

•	changes in regulatory policy or interpretation;

•	governmental investigations;

•	changes in the ratings of our debt or stock by rating agencies or securities analysts;

•	our purchase or development of real estate and/or additional IBX data centers;

•	our acquisitions of complementary businesses; or

•	the operational performance of our IBX data centers.

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•	human error;

•	equipment failure;

•	physical, electronic and cyber security breaches;

•	fire, earthquake, hurricane, flood, tornado and other natural disasters;

•	extreme temperatures;

•	water damage;

•	fiber cuts;

•	power loss;

•	terrorist acts;

•	sabotage and vandalism;

•	global pandemics such as the COVID-19 pandemic; and

•	failure of business partners who provide our resale products.

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•	fluctuations of foreign currencies in the markets in which we operate;

•	the timing and magnitude of depreciation and interest expense or other expenses related to the acquisition, purchase or construction of additional IBX data centers or the upgrade of existing IBX data centers;

•	demand for space, power and solutions at our IBX data centers;

•	changes in general economic conditions, such as from the COVID-19 pandemic or other economic downturns, or specific market conditions in the telecommunications and internet industries, any of which could have a material impact on us or on our customer base;

•	charges to earnings resulting from past acquisitions due to, among other things, impairment of goodwill or intangible assets, reduction in the useful lives of intangible assets acquired, identification of additional assumed contingent liabilities or revised estimates to restructure an acquired company's operations;

•	the duration of the sales cycle for our offerings and our ability to ramp our newly-hired sales persons to full productivity within the time period we have forecasted;

•	additions and changes in product offerings and our ability to ramp up and integrate new products within the time period we have forecasted;

•	restructuring charges or reversals of restructuring charges, which may be necessary due to revised sublease assumptions, changes in strategy or otherwise;

•	acquisitions or dispositions we may make;

•	the financial condition and credit risk of our customers;

•	the provision of customer discounts and credits;

•	the mix of current and proposed products and offerings and the gross margins associated with our products and offerings;

•	the timing required for new and future IBX data centers to open or become fully utilized;

•	competition in the markets in which we operate;

•	conditions related to international operations;

•	increasing repair and maintenance expenses in connection with aging IBX data centers;

•	lack of available capacity in our existing IBX data centers to generate new revenue or delays in opening new or acquired IBX data centers that delay our ability to generate new revenue in markets which have otherwise reached capacity;

•	changes in rent expense as we amend our IBX data center leases in connection with extending their lease terms when their initial lease term expiration dates approach or changes in shared operating costs in connection with our leases, which are commonly referred to as common area maintenance expenses;

•	the timing and magnitude of other operating expenses, including taxes, expenses related to the expansion of sales, marketing, operations and acquisitions, if any, of complementary businesses and assets;

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•	the cost and availability of adequate public utilities, including electricity;

•	changes in employee stock-based compensation;

•	overall inflation;

•	increasing interest expense due to any increases in interest rates and/or potential additional debt financings;

•	changes in our tax planning strategies or failure to realize anticipated benefits from such strategies;

•	changes in income tax benefit or expense; and

•	changes in or new GAAP as periodically released by the Financial Accounting Standards Board ("FASB").

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•	ownership limitations and transfer restrictions relating to our stock that are intended to facilitate our compliance with certain REIT rules relating to share ownership;

•	authorization for the issuance of "blank check" preferred stock;

•	the prohibition of cumulative voting in the election of directors;

•	limits on the persons who may call special meetings of stockholders;

•	limits on stockholder action by written consent; and

•	advance notice requirements for nominations to the Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

•	we will not be allowed a deduction for distributions to stockholders in computing our taxable income;

•	we will be subject to U.S. federal and state income tax on our taxable income at regular corporate income tax rates; and

•	we would not be eligible to elect REIT status again until the fifth taxable year that begins after the first year for which we failed to qualify for taxation as a REIT.

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