eqix-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-31293

EQUINIX, INC.

(Exact name of registrant as specified in its charter)


Delaware						77-0487526
(State of incorporation)						(I.R.S. Employer Identification No.)

One Lagoon Drive, Redwood City, California 94065

(Address of principal executive offices, including ZIP code)

(650) 598-6000

(Registrant's telephone number, including area code)

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

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $0.001

EQIX

The Nasdaq Stock Market LLC

0.250% Senior Notes due 2027

The Nasdaq Stock Market LLC

1.000% Senior Notes due 2033

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's Common Stock as of April 29, 2021 was 89,579,906.

Table of Contents

EQUINIX, INC.

INDEX


		Page No.

	Summary of Risk Factors	4

Part I - Financial Information

Item 1.	Condensed Consolidated Financial Statements (unaudited):	6

	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	6

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020	7

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020	8

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	9

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 4.	Controls and Procedures	56

Part II - Other Information

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	84

Item 3.	Defaults Upon Senior Securities	84

Item 4.	Mine Safety Disclosure	84

Item 5.	Other Information	84

Item 6.	Exhibits	85

Signatures		91

Index to Exhibits		92

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Summary of Risk Factors

Our business is subject to numerous risks and uncertainties that make an investment in our securities speculative or risky, any one of which could materially adversely affect our results of operations, financial condition or business. These risks include, but are not limited to, those listed below. This list is not complete, and should be read together with the section titled “Risk Factors” in this Quarterly Report on Form 10-Q, as well as the other information in this Quarterly Report on Form 10-Q and the other filings that we make with the U.S. Securities and Exchange Commission (the “SEC”).

Risks Related to Our Business and Our Operations

•The ongoing COVID-19 pandemic could have a negative effect on our business, results of operations and financial condition.

•We experienced an information technology security breach in the past and may be vulnerable to future security breaches, which could disrupt our operations and have a material adverse effect on our business, results of operation and financial condition.

•Terrorist activity, or other acts of violence, including violence stemming from the current climate of political and economic uncertainty, could adversely impact our business.

•Our offerings have a long sales cycle that may harm our revenue and results of operations.

•Any failure of our physical infrastructure or negative impact on our ability to meet our obligations to our customers or damage to customer infrastructure within our IBX data centers, could lead to significant costs and disruptions that could reduce our revenue and harm our business reputation and financial condition.

•We are currently making significant investments in our back-office information technology systems and processes. Difficulties from or disruptions to these efforts may interrupt our normal operations and adversely affect our business and results of operations.

•The level of insurance coverage that we purchase may prove to be inadequate.

•The use of high power density equipment may limit our ability to fully utilize our older IBX data centers.

•If we are unable to implement our evolving organizational structure or if we are unable to recruit or retain key executives and qualified personnel, our business could be harmed.

•We may not be able to compete successfully against current and future competitors.

•If we cannot continue to develop, acquire, market and provide new offerings or enhancements to existing offerings that meet customer requirements and differentiate us from our competitors, our results of operations could suffer.

•Our results of operations may fluctuate.

•Our days sales outstanding ("DSO") may be negatively impacted by process and system upgrades and acquisitions.

•We may incur goodwill and other intangible asset impairment charges, or impairment charges to our property, plant and equipment, which could result in a significant reduction to our earnings.

•We have incurred substantial losses in the past and may incur additional losses in the future.

•The failure to obtain favorable terms when we renew our IBX data center leases, or the failure to renew such leases, could harm our business and results of operations.

•We depend on a number of third parties to provide internet connectivity to our IBX data centers; if connectivity is interrupted or terminated, our results of operations and cash flow could be materially and adversely affected.

•We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties.

•Because we depend on the development and growth of a balanced customer base, including key magnet customers, failure to attract, grow and retain this base of customers could harm our business and results of operations.

•Industry consolidation may have a negative impact on our business model.

•Our business could be harmed by prolonged power outages, shortages or capacity constraints.

Risks Related to Our Expansion Plans

•Our construction of additional new IBX data centers or IBX data center expansions could involve significant risks to our business.

•Acquisitions present many risks, and we may not realize the financial or strategic goals that were contemplated at the time of any transaction.

•The anticipated benefits of our joint ventures with GIC Private Limited, Singapore’s sovereign wealth fund (“GIC”), may not be fully realized or take longer to realize than expected.

•Joint venture investments, such as our joint ventures with GIC, could expose us to risks and liabilities in connection with the formation of the new joint ventures, the operation of such joint ventures without sole decision-making authority, and our reliance on joint venture partners who may have economic and business interests that are inconsistent with our business interests.

•If we cannot effectively manage our international operations, and successfully implement our international expansion plans, or comply with evolving laws and regulations, our revenues may not increase, and our business and results of operations would be harmed.

•We are continuing to invest in our expansion efforts but may not have sufficient customer demand in the future to realize expected returns on these investments.

Risks Related to Our Capital Needs and Capital Strategy

•Our substantial debt could adversely affect our cash flows and limit our flexibility to raise additional capital.

•The phase-out of the London Interbank Offered Rate (“LIBOR”), and uncertainty as to its replacement, may adversely affect our business.

•Sales or issuances of shares of our common stock may adversely affect the market price of our common stock.

•If we are not able to generate sufficient operating cash flows or obtain external financing, our ability to fund incremental expansion plans may be limited.

•Fluctuations in foreign currency exchange rates in the markets in which we operate internationally could harm our results of operations.

•Our derivative transactions expose us to counterparty credit risk.

Risks Related to Environmental Laws and Climate Change Impacts

•Environmental regulations may impose upon us new or unexpected costs.

•Our business may be adversely affected by climate change and responses to it.

Risks Related to Certain Regulations and Laws, Including Tax Laws

•Changes in U.S. or foreign tax laws, regulations, or interpretations thereof, including changes to tax rates, may adversely affect our financial statements and cash taxes.

•Government regulation or failure to comply with laws and regulations may adversely affect our business.

Risks Related to Our Taxation as a REIT

•We have a number of risks related to our taxation as a REIT, including the risk that we may not be able to maintain our qualification as a REIT which could expose us to substantial corporate income tax and have a materially adverse effect on our business, financial condition, and results of operations.

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PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

EQUINIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	March 31, 2021		December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,752,990	$	1,604,869
Short-term investments	4,229		4,532
Accounts receivable, net of allowance of $10,641 and $10,677	684,642		676,738
Other current assets	407,856		323,016

Total current assets	2,849,717		2,609,155

Property, plant and equipment, net	14,768,661		14,503,084
Operating lease right-of-use assets	1,405,835		1,475,057
Goodwill	5,387,601		5,472,553
Intangible assets, net	2,092,253		2,170,945
Other assets	812,923		776,047
Total assets	$	27,316,990	$	27,006,841
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	742,300	$	844,862
Accrued property, plant and equipment	351,634		301,155
Current portion of operating lease liabilities	147,164		154,207
Current portion of finance lease liabilities	149,388		137,683
Current portion of mortgage and loans payable	79,902		82,289
Current portion of senior notes	150,003		150,186
Other current liabilities	213,189		354,368

Total current liabilities	1,833,580		2,024,750
Operating lease liabilities, less current portion	1,252,566		1,308,627
Finance lease liabilities, less current portion	1,912,507		1,784,816
Mortgage and loans payable, less current portion	1,229,073		1,287,254
Senior notes, less current portion	9,685,361		9,018,277
Other liabilities	827,228		948,999
Total liabilities	16,740,315		16,372,723
Commitments and contingencies (Note 10)
Equinix stockholders' equity
Common stock, $0.001 par value per share: 300,000,000 shares authorized; 89,890,922 issued and 89,574,510 outstanding in 2021 and 89,462,304 issued and 89,134,252 outstanding in 2020	90		89
Additional paid-in capital	15,166,407		15,028,357
Treasury stock, at cost; 316,412 shares in 2021 and 328,052 shares in 2020	(117,786)		(122,118)
Accumulated dividends	(5,379,693)		(5,119,274)
Accumulated other comprehensive loss	(1,008,848)		(913,368)
Retained earnings	1,916,664		1,760,302
Total Equinix stockholders' equity	10,576,834		10,633,988
Non-controlling interests	(159)		130
Total stockholders' equity	10,576,675		10,634,118
Total liabilities and stockholders' equity	$	27,316,990	$	27,006,841

See accompanying notes to condensed consolidated financial statements.

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EQUINIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	Three Months Ended March 31,
	2021		2020
	(Unaudited)
Revenues	$	1,596,064	$	1,444,542
Costs and operating expenses:
Cost of revenues	811,217		736,282
Sales and marketing	182,827		180,450
General and administrative	301,456		261,597
Transaction costs	1,182		11,530

Loss on asset sales	1,720		1,199
Total costs and operating expenses	1,298,402		1,191,058
Income from operations	297,662		253,484
Interest income	729		4,273
Interest expense	(89,681)		(107,338)
Other income (expense)	(6,950)		5,170
Loss on debt extinguishment	(13,058)		(6,441)
Income before income taxes	188,702		149,148
Income tax expense	(32,628)		(30,191)
Net income	156,074		118,957
Net (income) loss attributable to non-controlling interests	288		(165)
Net income attributable to Equinix	$	156,362	$	118,792
Earnings per share ("EPS") attributable to Equinix:
Basic EPS	$	1.75	$	1.39
Weighted-average shares for basic EPS	89,330		85,551
Diluted EPS	$	1.74	$	1.38
Weighted-average shares for diluted EPS	89,842		86,144

See accompanying notes to condensed consolidated financial statements.

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EQUINIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)


	Three Months Ended March 31,
	2021		2020
	(Unaudited)
Net income	$	156,074	$	118,957
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment ("CTA") loss, net of tax effects of $0 and $0	(295,146)		(413,792)
Net investment hedge CTA gain, net of tax effect of $0 and $0	170,175		144,946

Unrealized gain (loss) on cash flow hedges, net of tax effects of $(7,892) and $(6,367)	29,478		(3,256)
Net actuarial gain on defined benefit plans, net of tax effects of $(5) and $9	12		35
Total other comprehensive loss, net of tax	(95,481)		(272,067)
Comprehensive income (loss), net of tax	60,593		(153,110)
Net (income) loss attributable to non-controlling interests	288		(165)
Other comprehensive loss attributable to non-controlling interests	1		11
Comprehensive income (loss) attributable to Equinix	$	60,882	$	(153,264)

See accompanying notes to condensed consolidated financial statements.

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EQUINIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Three Months Ended March 31,
	2021		2020
	(Unaudited)
Cash flows from operating activities:
Net income	$	156,074	$	118,957
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	341,622		287,378
Stock-based compensation	78,350		64,499
Amortization of intangible assets	53,395		48,491
Amortization of debt issuance costs and debt discounts and premiums	3,940		3,460
Provision for credit loss allowance	2,740		3,934

Loss on asset sales	1,720		1,199

Loss on debt extinguishment	13,058		6,441
Other items	7,743		4,484
Changes in operating assets and liabilities:
Accounts receivable	(17,620)		15,306
Income taxes, net	(10,274)		3,697
Other assets	(73,255)		(101,882)
Operating lease right-of-use assets	40,924		38,797
Operating lease liabilities	(36,563)		(35,193)
Accounts payable and accrued expenses	(76,362)		(25,681)
Other liabilities	(94,334)		82,943
Net cash provided by operating activities	391,158		516,830
Cash flows from investing activities:
Purchases of investments	(22,406)		(44,813)
Sales of investments	4,057		5,873
Business acquisitions, net of cash and restricted cash acquired	—		(478,287)
Purchases of real estate	(53,737)		(36,373)
Purchases of other property, plant and equipment	(563,598)		(400,941)

Net cash used in investing activities	(635,684)		(954,541)
Cash flows from financing activities:
Proceeds from employee equity awards	40,034		30,391
Payment of dividends	(263,039)		(233,479)
Proceeds from public offering of common stock, net of issuance costs	—		101,792
Proceeds from senior notes, net of debt discounts	1,290,752		—
Proceeds from mortgage and loans payable	—		250,000
Repayments of finance lease liabilities	(32,584)		(18,977)
Repayments of mortgage and loans payable	(20,186)		(18,501)
Repayment of senior notes	(590,650)		(343,711)
Debt extinguishment costs	(8,521)		(4,619)
Debt issuance costs	(3,152)		—

Net cash provided by (used in) financing activities	412,654		(237,104)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash	(22,019)		(25,287)

Net increase in cash, cash equivalents and restricted cash	146,109		(700,102)
Cash, cash equivalents and restricted cash at beginning of period	1,625,695		1,886,613
Cash, cash equivalents and restricted cash at end of period	$	1,771,804	$	1,186,511

Cash and cash equivalents	$	1,752,990	$	1,171,339
Current portion of restricted cash included in other current assets	9,702		6,483
Non-current portion of restricted cash included in other assets	9,112		8,689
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows	$	1,771,804	$	1,186,511

See accompanying notes to condensed consolidated financial statements.

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EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Equinix, Inc. (collectively with its consolidated subsidiaries referred to as "Equinix," the "Company," "we," "our," or "us") 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. In the preparation of our condensed consolidated financial statements, we have considered potential impacts of the COVID-19 pandemic on our critical and significant accounting estimates. There was no significant impact to our condensed consolidated financial statements. We will continue to evaluate the nature and extent of the potential impacts to our business and our condensed consolidated financial statements.

Our condensed consolidated balance sheet data as of December 31, 2020 has been derived from audited consolidated financial statements as of that date. Our 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 our Form 10-K as filed with the SEC on February 19, 2021. 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 our acquisitions of 12 data center sites across Canada from BCE Inc. ("Bell") from October 1, 2020 and one additional data center site from November 2, 2020, Packet Host, Inc. (“Packet”) from March 2, 2020, and three data centers in Mexico acquired from Axtel S.A.B. de C.V ("Axtel") from January 8, 2020. All intercompany accounts and transactions have been eliminated in consolidation.

Income Taxes

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

We provide 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 our operating performance, tax law changes and future business acquisitions.

Our effective tax rates were 17.3% and 20.2% for the three months ended March 31, 2021 and 2020, respectively.

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EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06: Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock and modifies the disclosure requirement for the convertible instruments. Additionally, this ASU improves the consistency of EPS calculations by eliminating the use of the treasury stock method to calculate diluted EPS for convertible instruments and clarifies certain areas under the current EPS guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted at the beginning of the fiscal year after December 15, 2020. We are currently evaluating the extent of the impact of this ASU, but do not expect the adoption of this standard to have a significant impact on our condensed consolidated financial statements.

Accounting Standards Adopted

In December 2019, FASB issued 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. 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. On January 1, 2021, we adopted this ASU on a prospective basis and the adoption of this standard did not have an impact on our condensed consolidated financial statements.

In March 2020, FASB issued ASU 2020-04, Reference Rate Reform ("Topic 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In addition, FASB issued ASU 2021-01, Reference Rate Reform ("Topic 848"), which clarifies the scope of Topic 848. Collectively, the guidance 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. ASU 2020-04 was effective for all entities as of March 12, 2020 through December 31, 2022 and ASU 2021-01 is effective upon issuance. We adopted these ASUs upon their respective issuances and there was no impact on our condensed consolidated financial statements as a result of adopting the guidance. We will evaluate our debt, derivative and lease contracts that may become eligible for modification relief and may apply the elections prospectively as needed.

2. Revenue

Contract Balances

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


	Accounts receivable, net (1)		Contract assets, current		Contract assets, non-current		Deferred revenue, current		Deferred revenue, non-current
Beginning balances as of January 1, 2021	$	676,738	$	13,534	$	54,050	$	101,258	$	71,242
Closing balances as of March 31, 2021	684,642		29,671		50,546		105,283		64,648
Increase (Decrease)	$	7,904	$	16,137	$	(3,504)	$	4,025	$	(6,594)

(1) The net change in our allowance for credit losses was insignificant during the three months ended March 31, 2021.

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EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The difference between the opening and closing balances of our accounts receivable, net, contract assets and deferred revenues primarily results from revenue growth and the timing difference between the satisfaction of our performance obligation and the customer's payment. The amount of revenue recognized during the three months ended March 31, 2021 from the opening deferred revenue balance as of January 1, 2021 was $36.4 million.

Remaining performance obligations

As of March 31, 2021, approximately $8.2 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 xScaleTM 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 we are considered the lessor.

3. Earnings Per Share

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,
	2021		2020
Net income	$	156,074	$	118,957
Net (income) loss attributable to non-controlling interests	288		(165)
Net income attributable to Equinix	$	156,362	$	118,792

Weighted-average shares used to calculate basic EPS	89,330		85,551
Effect of dilutive securities:
Employee equity awards	512		593
Weighted-average shares used to calculate diluted EPS	89,842		86,144

EPS attributable to Equinix:
Basic EPS	$	1.75	$	1.39
Diluted EPS	$	1.74	$	1.38

We have excluded common stock related to employee equity awards in the diluted EPS calculation above of approximately 148,000 shares and 45,000 shares for the three months ended March 31, 2021 and 2020, respectively, because their effect would be anti-dilutive.

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EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

4. Acquisitions

2020 Acquisitions

Acquisition of Bell Data Centers (the "Bell Acquisition")

On October 1, 2020, we completed the acquisition of 12 data center sites across Canada from Bell, with one additional data center in Ottawa Canada acquired on November 2, 2020, for a total combined purchase consideration of approximately C$934.3 million, or $704.0 million at the exchange rates in effect on those dates. The acquisition supports our ongoing expansion to meet customer demand in Canada.

Acquisition of Packet (the "Packet Acquisition")

On March 2, 2020, we 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, we 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, we 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 Equinix MetalTM, is expected to accelerate our strategy to help enterprises deploy hybrid multicloud architectures on our data center platform.

Acquisition of data centers from Axtel (the "Axtel Acquisition")

On January 8, 2020, 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, including $175.0 million in cash and $14.0 million we 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 our ongoing expansion to meet customer demand in our Americas region.

Purchase price allocation

Each of these 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, 2021, we continued to review the detailed valuation analysis to derive the fair value of assets acquired and liabilities assumed from the Bell Acquisition, 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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EQUINIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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


	Bell (1)		Packet		Axtel
	Provisional		Final
Cash and cash equivalents	$	—	$	1,068	$	—
Accounts receivable	—		5,098		—
Other current assets	696		299		14,048
Property, plant and equipment	538,717		27,945		76,407
Operating lease right-of-use assets	14,359		1,519		1,646
Intangible assets	75,857		58,500		22,750
Goodwill	172,387		230,620		78,902
Deferred tax and other assets	722		138		—
Total assets acquired	802,738		325,187		193,753
Accounts payable and accrued liabilities	(895)		(1,275)		(238)
Other current liabilities	—		(860)		—
Operating lease liabilities	(13,340)		(1,519)		(1,586)
Finance lease liabilities	(80,026)		(27,945)		—
Deferred tax and other liabilities	(4,495)		(3,290)		(2,911)
Net assets acquired	$	703,982	$	290,298	$	189,018

(1)For the Bell Acquisition, the purchase price allocation adjustments since the provisional amounts reported as of December 31, 2020 were not significant.

Property, plant and equipment - The fair values of property, plant and equipment acquired from these three acquisitions were estimated by applying the cost approach, with the exception of land, which we 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.

Intangible assets - 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)
Bell:
Customer relationships	$	75,857	15.0	15.0
Packet:
Trade names	1,300		3.0	3.0
Existing technology	5,100		3.0	3.0
Customer relationships	52,100		10.0	10.0
Axtel:
Customer relationships	22,750		15.0	15.0

The fair values of customer relationships acquired from these acquisitions were estimated from 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. We applied a discount rate of 8.0% for Bell, 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.

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The fair value of the Packet trade name was estimated using the relief from royalty method under the income approach. We 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.

Goodwill

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 these acquisitions. Goodwill from these acquisitions is attributable to our Americas region. Goodwill from the Bell Acquisition is expected to be deductible for local tax purposes while goodwill from the Packet and Axtel Acquisitions are not amortizable for local tax purposes.

Revenues and net income and loss from operations

The operating results of these three acquisitions are reported in our Americas region following the date of acquisition. During the three months ended March 31, 2021, our results of operations include $48.5 million of revenues and $9.0 million of net loss from operations from the Bell, Packet and Axtel Acquisitions.

Pending Acquisition of GPX India

On August 7, 2020, we entered into an agreement to purchase the India operations of GPX Global Systems, Inc. ("GPX India"), representing two data centers in Mumbai, India for approximately $161.0 million in an all-cash transaction (the “GPX India Acquisition”). The GPX India Acquisition is expected to close in the second quarter of 2021, subject to customary closing conditions including regulatory approval. Upon the close of the acquisition, the operating results of the acquired business will be reported in our Asia-Pacific region.

5. Equity Method Investments

The following table summarizes the equity method investments (in thousands):


Investee	Ownership Percentage		March 31, 2021		December 31, 2020
EMEA Joint Venture with GIC	20	%	$	105,532	$	101,892
Asia-Pacific Joint Venture with GIC	20	%	50,347		43,432
Other	Various		16,517		17,747
Total			$	172,396	$	163,071

EMEA Joint Venture

In 2019, we entered into a joint venture in the form of a limited liability partnership with GIC Private Limited, Singapore's sovereign wealth fund ("GIC") (the "EMEA Joint Venture"), to develop and operate xScale™ data centers in Europe. The EMEA Joint Venture is not a variable interest entity ("VIE") because its equity investors have the characteristics of a controlling financial interest and it is sufficiently capitalized to sustain its operations, requiring additional funding from its partners only when expanding operations. During the three months ended March 31, 2021, we made additional equity contributions of $7.1 million to the EMEA Joint Venture. Our share of income and losses of equity method investments from this joint venture, which is attributable to our EMEA region, was insignificant for the three months ended March 31, 2021 and 2020 and was included in other income on the condensed consolidated statement of operations.

We committed to make future equity contributions to the EMEA Joint Venture for funding its future development. As of March 31, 2021, we had future equity contribution commitments of $24.9 million.

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Variable Interest Entity

Asia-Pacific Joint Venture

On December 17, 2020, we entered into a second joint venture with GIC (the "Asia-Pacific Joint Venture") to develop and operate xScale™ data centers in Asia-Pacific. We provide certain management services to the Asia-Pacific Joint Venture operations and earn fees based on those services and performance. The Asia-Pacific Joint Venture requires additional funding from its partners in order to sustain its current operations. As a result, it was determined to be a VIE. The power to direct the activities of the Asia-Pacific Joint Venture that most significantly impact economic performance is shared equally by both partners. These activities include data center construction and operations, sales and marketing, financing, and real estate purchases or sales. Decisions about these activities require the consent of both GIC and us. We concluded that neither party is deemed to have predominant control over the Asia-Pacific Joint Venture and neither party is its primary beneficiary. Upon closing the Asia-Pacific Joint Venture, we recorded our initial 20% partnership interest at fair value of $42.6 million in total at the exchange rate in effect on December 17, 2020. During the three months ended March 31, 2021, we made additional equity contributions of $11.2 million to the Asia-Pacific Joint Venture. For the three months ended March 31, 2021, our share of income and losses of equity method investments from this joint venture, which was attributable to our Asia-Pacific region, was not significant and was included in other income on the condensed consolidated statement of operations.

In addition to the investment in the Asia-Pacific Joint Venture, we also had $14.2 million of receivables from the Asia-Pacific Joint Venture relating to purchase price adjustments on the sale of data center assets as well as amounts due under commercial service agreements, which were presented within accounts receivable, net on the condensed consolidated balance sheet as of March 31, 2021. During the three months ended March 31, 2021, the total revenue recorded from these services was insignificant.

Concurrent with the closing of the Asia-Pacific Joint Venture, the Asia-Pacific Joint Venture entered into a credit facility agreement and a bond agreement with a group of lenders for secured debt facilities of $305.2 million in total at the exchange rate in effect on December 31, 2020. The Asia-Pacific Joint Venture’s debt is secured by net assets of the Asia-Pacific Joint Venture and is without recourse to the partners. Under the Asia-Pacific Joint Venture agreement and pursuant to the credit facility and bond agreements, both our joint venture partner GIC and us are also required to make additional equity contributions proportionately upon occurrences such as an interest shortfall, cost-overrun or a capital shortfall needed to complete certain construction phases.

We committed to make future equity contributions to the Asia-Pacific Joint Venture for funding its future development. As of March 31, 2021, we had future equity contribution commitments of $7.8 million.

Our maximum exposure to loss related to this unconsolidated VIE is limited to our equity investments in the VIE, outstanding receivables including any unpaid service and performance fees earned, and future funding commitments including those that may be required pursuant to the credit facility and bond agreements. As of March 31, 2021, our maximum exposure to loss related to the Asia-Pacific Joint Venture was approximately $72.3 million.

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Related Party Transactions

In connection with the sale of the PA9 data center to the EMEA Joint Venture, we also have a commitment to the EMEA Joint Venture to complete a residual portion of the PA9 center for an estimated cost of $22.4 million in total, which is reimbursable in full upon completion. As March 31, 2021, we had contract assets, current of $17.1 million, in relation to the progress in completing this commitment.

The contingent consideration from the sales of xScaleTM data centers to the EMEA Joint Venture are considered derivatives and are remeasured at fair value each reporting period using inputs such as probabilities of payment, discount rates, foreign currency forward rates and projected payment dates. The fair value measurements were based on significant inputs that are not observable in the market and thus represent Level 3 measurements. As of March 31, 2021 and December 31, 2020, the total fair value of the contingent consideration was $42.4 million and $44.2 million, respectively, which was included in other current assets on the condensed consolidated balance sheets. Changes in the fair value of the contingent consideration were recorded in gain (loss) on asset sales on the condensed consolidated statement of operations.

We also have a sub-lease agreement with the EMEA Joint Venture to sub-lease a portion of London ("LD") 10-2 data center or former LD10 data center, for a total of 15 years. For the three months ended March 31, 2021 and 2020, we recorded approximately $4.5 million and $3.4 million, respectively, of rent expense for the LD10-2 data center. As of March 31, 2021 and December 31, 2020, we had a finance lease ROU assets of $128.2 million and $127.2 million, respectively and a finance lease ROU liability of $ 132.5 million and $130.8 million, respectively.

We provide various services to the EMEA Joint Venture through multiple agreements, including sales and marketing, development management, facilities management, and asset management services. As of March 31, 2021 and December 31, 2020, we had $7.7 million and $6.5 million, respectively, of total receivables from the EMEA Joint Ventures. For the three months ended March 31, 2021 and 2020, total revenues from these contracts were $7.2 million and $4.6 million, respectively. The transactions with the EMEA Joint Venture are generally considered to have been negotiated arm's length.

Additionally, we have an agreement to lease to the EMEA Joint Venture a portion of land for the Frankfurt 9 xScaleTM data center and a new building that is under construction on the land. As of March 31, 2021, the lease has not commenced yet and we recorded approximately $17.2 million of other liabilities in connection with the construction of the Frankfurt 9 xScaleTM data center.

As previously described above, we provide various services to the Asia-Pacific Joint Venture, including portfolio management, sales and marketing, development, and facilities management services, which give rise receivables. The transactions with the Asia-Pacific Joint Venture are generally considered to have been negotiated arm's length.

6. Derivatives and Hedging Activities

Derivatives Designated as Hedging Instruments

Net Investment Hedges. We are exposed to the impact of foreign exchange rate fluctuations on the value of investments in our foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, we have entered into various foreign currency debt obligations, which are designated as hedges against our net investments in foreign subsidiaries. As of March 31, 2021 and December 31, 2020, the total principal amounts of foreign currency debt obligations designated as net investment hedges were $2.2 billion and $1.9 billion, respectively.

We also use cross-currency interest rate swaps to hedge a portion of our net investment in our European operations. As of both March 31, 2021 and December 31, 2020, U.S. Dollar to Euro cross-currency interest rate swap contracts with a total notional amount of $3.3 billion were outstanding, with maturity dates from April 2022 to November 2026. At maturity of each outstanding contract, we will receive U.S. Dollars from and pay Euros to the contract counterparty. During the term of each contract, we receive interest payments in U.S. Dollars and make interest payments in Euros based on a notional amount and fixed interest rates determined at contract inception.

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From time to time, we use foreign currency forward contracts to hedge against the effect of foreign exchange rate fluctuations on a portion of our net investment in our foreign subsidiaries. As of both March 31, 2021 and December 31, 2020, the total notional amount of foreign currency forward contracts designated as net investment hedges was $355.6 million.

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, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended March 31,
		2021		2020
Foreign currency debt		$	68,740	$	99,102
Cross-currency interest rate swaps (included component) (1)		141,228		14,140
Cross-currency interest rate swaps (excluded component) (2)		(40,529)		31,704
Foreign currency forward contracts (included component) (1)		708		—
Foreign currency forward contracts (excluded component) (3)		28		—
Total		$	170,175	$	144,946

Amount of gain or (loss) recognized in earnings:
	Location of gain or (loss)	Three Months Ended March 31,
		2021		2020
Cross-currency interest rate swaps (excluded component) (2)	Interest expense	$	10,049	$	5,089
Foreign currency forward contracts (excluded component) (3)	Interest expense	164		—
Total		$	10,213	$	5,089

(1)Included component represents foreign exchange spot rates.

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

(3)Excluded component represents foreign currency forward points.

Cash Flow Hedges. We hedge our foreign currency translation exposure for forecasted revenues and expenses in our 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 we use to hedge this exposure are designated as cash flow hedges. As of March 31, 2021 and December 31, 2020, the total notional amounts of these foreign exchange contracts were $989.0 million and $912.9 million, respectively.

As of March 31, 2021, our foreign currency cash flow hedge instruments had maturity dates ranging from April 2021 to December 2022 and we recorded a net loss of $18.9 million within accumulated other comprehensive income (loss) relating to these foreign exchange contracts that will be reclassified to revenues and expenses as they mature in the next 12 months. As of December 31, 2020, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2021 to December 2022 and we recorded a net loss of $35.4 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.

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

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We hedge the interest rate exposure created by anticipated fixed rate debt issuances through the use of treasury locks and swap locks (collectively, interest rate locks), which are designated as cash flow hedges. As of March 31, 2021, the total notional amount of interest rate locks outstanding was $725.0 million. As of December 31, 2020, we had no interest rate locks outstanding. During the three months ended March 31, 2021, we had no settled interest rate locks. When interest rate locks are settled, any gain or loss from the transactions is deferred and included as a component of other comprehensive income (loss) and is amortized to interest expense over the term of the forecasted hedged transaction which is equivalent to the term of the interest rate locks. As of March 31, 2021 and December 31, 2020, we recorded a net loss of $3.6 million and $4.1 million, respectively, within accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks.

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, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended March 31,
		2021		2020
Foreign currency forward and option contracts (included component) (1)		$	31,374	$	28,025
Foreign currency option contracts (excluded component) (2)		196		1,318
Interest rate locks		5,801		(26,232)
Total		$	37,371	$	3,111

Amount of gain or (loss) reclassified from accumulated other comprehensive income to income:
		Three Months Ended March 31,
	Location of gain or (loss)	2021		2020
Foreign currency forward contracts	Revenues	$	(12,969)	$	21,219
Foreign currency forward contracts	Costs and operating expenses	7,204		(11,000)
Interest rate locks	Interest Expense	(805)		168
Total		$	(6,570)	$	10,387

Amount of gain or (loss) excluded from effectiveness testing included in income:
		Three Months Ended March 31,
	Location of gain or (loss)	2021		2020

Foreign currency option contracts (excluded component) (2)	Revenues	$	(181)	$	(521)
Total		$	(181)	$	(521)

(1)Included component represents foreign exchange spot rates.

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

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. We are deemed to have foreign currency forward contracts embedded in certain of our 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 our balance sheet at their fair value. The majority of these embedded derivatives arise as a result of our foreign subsidiaries pricing their customer contracts in U.S. Dollars.

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Economic Hedges of Embedded Derivatives. We use foreign currency forward contracts to manage the foreign exchange risk associated with our 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. We also use 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 our 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, 2021 and December 31, 2020, the total notional amounts of these foreign currency contracts were $5.9 billion and $3.4 billion, respectively.

The following table presents the effect of derivatives not designated as hedging instruments in our 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)	2021		2020
Embedded derivatives	Revenues	$	4,495	$	7,451
Economic hedge of embedded derivatives	Revenues	(4,213)		(7,902)
Foreign currency forward contracts	Other income (expense)	56,800		133,824
Total		$	57,082	$	133,373

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Fair Value of Derivative Instruments

The following table presents the fair value of derivative instruments recognized in our condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020 (in thousands):


	March 31, 2021				December 31, 2020
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Designated as hedging instruments:
Cash flow hedges
Foreign currency forward and option contracts	$	7,832	$	28,869	$	351	$	52,804
Interest rate locks	4,996		—		—		—
Net investment hedges
Cross-currency interest rate swaps	8,259		100,499		—		192,939
Foreign currency forward contracts	—		22,011		—		17,041
Total designated as hedging	21,087		151,379		351		262,784

Not designated as hedging instruments:
Embedded derivatives	5,324		1,604		3,255		3,858
Economic hedges of embedded derivatives	—		2,223		4,372		12
Foreign currency forward contracts	50,919		9,644		3,721		133,805
Total not designated as hedging	56,243		13,471		11,348		137,675
Total Derivatives	$	77,330	$	164,850	$	11,699	$	400,459

(1)As presented in our condensed consolidated balance sheets within other current assets and other assets.

(2)As presented in our condensed consolidated balance sheets within other current liabilities and other liabilities.

Offsetting Derivative Assets and Liabilities

We present our derivative instruments and the accrued interest related to cross-currency interest rate swaps at gross fair values in the condensed consolidated balance sheets. We enter into master netting agreements with our 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, we do 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, 2021 and December 31, 2020 (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, 2021
Derivative assets	$	105,185	$	—	$	105,185	$	(86,858)	$	18,327
Derivative liabilities	181,461		—		181,461		(86,858)		94,603

December 31, 2020
Derivative assets	$	38,447	$	—	$	38,447	$	(35,100)	$	3,347
Derivative liabilities	415,628		—		415,628		(35,100)		380,528

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7. Fair Value Measurements

We perform fair value measurements in accordance with ASC 820, Fair Value Measurement, which establishes three levels of inputs that we use to measure fair value:

•Level 1: quoted prices in active markets for identical assets or liabilities.

•Level 2: observable inputs (e.g. spot rates and other data from the third-party pricing vendors for our derivative instruments) other than quoted market prices included within Level 1 that are observable, either directly or indirectly, for the assets or liabilities.

•Level 3: unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

Our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 were as follows (in thousands):


	As of March 31, 2021						As of December 31, 2020
	Fair Value		Fair Value Measurement Using				Fair Value		Fair Value Measurement Using
			Level 1		Level 2				Level 1		Level 2
Assets:
Money market and deposit accounts	$	587,615	$	587,615	$	—	$	611,071	$	611,071	$	—
Publicly traded equity securities	153		153		—		159		159		—
Certificates of deposit	4,076		—		4,076		4,373		—		4,373
Derivative instruments (1)	77,330		—		77,330		11,699		—		11,699
Total	$	669,174	$	587,768	$	81,406	$	627,302	$	611,230	$	16,072
Liabilities:
Derivative instruments (1)	$	164,850	$	—	$	164,850	$	400,459	$	—	$	400,459

(1)Amounts are included within other current assets, other assets, others current liabilities and other liabilities in the condensed consolidated balance sheets.

We did not have any nonfinancial assets or liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020.

Other than the contingent consideration related to the EMEA Joint Venture as described in Note 5 above, we did not have any Level 3 financial assets or financial liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020.

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8. Leases

Significant Lease Transactions

The following table summarizes the significant lease transactions during the three months ended March 31, 2021 (in millions):

Renewal/Termination Options Excluded (1)

Net Incremental (2)

Lease

Quarter

Transaction

Lease Classification

ROU assets

ROU liabilities

Silicon Valley 8 ("SV8") data center lease extended (3)