EQUINIX, INC. REDWOOD CITY, Calif., May 4, 2016 /PRNewswire/ -- Equinix, Inc. (Nasdaq: EQIX), a global interconnection and data center company, today reported quarterly results for the quarter ended March 31, 2016. The Company uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements.
First Quarter 2016 Results Summary
-- Revenues from continuing operations
-- $844.2 million, a 16% increase over the previous quarter
-- Includes $34.2 million of revenues from Bit-isle
-- Includes $84.4 million of revenues from Telecity
-- Operating Income
-- $112.7 million, a 17% decrease from the previous quarter
-- Adjusted EBITDA
-- $380.7 million, a 45% adjusted EBITDA margin
-- Includes $11.6 million of adjusted EBITDA from Bit-isle
-- Includes $40.7 million of adjusted EBITDA from Telecity
-- Includes $13.3 million of integration costs
-- Net Loss from Continuing Operations
-- $37.3 million
-- AFFO
-- $209.8 million, an 18% increase over the previous quarter
-- Includes $63.5 million of foreign currency losses related to the
Telecity transaction and $13.3 million of integration costs
2016 Annual Guidance Summary
-- Revenues from continuing operations
-- >$3,595.0 million, a 32% increase over the previous year; an organic
and constant currency growth rate of greater than 13.4%
-- Assumes $565.0 million in revenues from Telecity and Bit-isle
-- Adjusted EBITDA
-- > $1,650.0 million or a 45.9% adjusted EBITDA margin
-- Assumes 100 basis point YoY improvement in adjusted EBITDA for the
Equinix organic business
-- Assumes $255.0 million of adjusted EBITDA from Telecity and Bit-isle
-- Assumes $55.0 million of integration costs for acquisitions
-- AFFO
-- > $1,015.0 million, a 22% increase over the previous year
-- Assumes a $63.5 million foreign currency loss related to the
Telecity acquisition
-- Assumes $55.0 million of integration costs for acquisitions
This quarter includes the quarterly results of Bit-isle and Telecity, which were acquired by the Company in November 2015 and January 2016, respectively. In addition, in order to obtain the approval of the European Commission for the acquisition of Telecity, the Company and Telecity agreed to divest certain data centers, including Equinix's London 2 International Business Exchange(TM) (IBX®) in London, UK ("LD2") and certain Telecity data centers. The financial results include results from Equinix's London 2 in continuing operations; however, the data centers in Telecity that are to be divested are reported as discontinued operations.
Revenues from continuing operations were $844.2 million for the first quarter, a 16% increase over the previous quarter and a 31% increase over the same quarter last year. This result includes $118.6 million of revenues from the acquisitions of Bit-isle and Telecity. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $797.1 million for the first quarter, a 16% increase over the previous quarter and a 31% increase over the same quarter last year. Non-recurring revenues were $47.1 million in the quarter. MRR churn for the first quarter was 2.2% as compared to 2.3% in the previous quarter.
"2016 is off to a strong start with both revenue and adjusted EBITDA above the top end of our guidance ranges for the first quarter," said Steve Smith, president and CEO of Equinix. "We continue to see strength in all three regions as the scale of our global platform addresses the growing demand for businesses as they move to distributed infrastructure environments and re-architect their IT delivery to better interconnect people, locations, clouds and data. With the integration of Telecity and Bit-isle, our reach now spans 21 countries, 40 metros and 145 IBX centers, enabling customers to reach all of the world's top business markets. This global scale provides a critical source of differentiation for the company and a strong platform for continued growth."
Cost of revenues was $427.7 million for the first quarter, a 22% increase from the previous quarter and a 43% increase from the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $156.6 million for the quarter, which we refer to as cash cost of revenues, was $271.1 million for the quarter, a 19% increase over the previous quarter and a 41% increase over the same quarter last year. Gross margins for the quarter were 49%, as compared to 52% for the previous quarter and 54% for the same quarter last year. Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, were 68% for the quarter, 69% for the previous quarter and 70% for the same quarter last year.
Selling, general and administrative expenses were $272.5 million for the first quarter, a 21% increase over the previous quarter and a 42% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization, accretion and stock-based compensation of $80.1 million for the quarter, which we refer to as cash selling, general and administrative expenses, were $192.4 million for the quarter, a 14% increase from the previous quarter and a 32% increase over the same quarter last year.
Interest expense was $100.9 million for the first quarter, a 27% increase from the previous quarter and a 47% increase from the same quarter last year, primarily attributed to the debt financings in November 2015 and other financings such as various capital lease and other financing obligations related to the Telecity and Bit-isle acquisitions.
The Company recorded an income tax benefit from continuing operations of $10.6 million for the first quarter as compared to an income tax benefit of $2.1 million for the previous quarter and income tax expense from continuing operations of $6.2 million for the same quarter last year.
Net income from discontinued operations was $6.2 million for the first quarter.
Net loss from continuing operations was $37.3 million for the first quarter. This represents a basic and diluted net loss per share from continuing operations of $0.55 for the first quarter based on a weighted average basic and diluted share count of 68.1 million shares. Basic and diluted net income per share from discontinued operations was $0.09 per share.
Income from continuing operations was $112.7 million for the first quarter, a 17% decrease from the previous quarter and a 26% decrease over the same quarter last year. Adjusted EBITDA, as defined below, for the first quarter was $380.7 million, a 14% increase over the previous quarter and a 24% increase over the same quarter last year. Adjusted EBITDA includes $52.3 million from the acquisitions of Bit-isle and Telecity.
Adjusted funds from operations ("AFFO"), as defined below, were $209.8 million for the first quarter, an 18% increase from the previous quarter and a 5% decrease over the same quarter last year. This represents a basic AFFO per share attributable to the Company of $3.08 for the first quarter and a diluted AFFO per share attributable to the Company of $2.98 for the first quarter. AFFO for the first quarter includes a foreign currency exchange loss of $63.5 million primarily attributed to the Telecity acquisition, and $13.3 million of integration costs.
Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the first quarter, were $197.7 million, as compared to capital expenditures of $280.6 million for the previous quarter and $150.1 million for the same quarter last year.
The Company generated cash from operating activities of $104.3 million for the first quarter as compared to cash generated from operating activities of $235.1 million in the previous quarter. Cash used in investing activities was $1.3 billion in the first quarter, primarily attributable to the Telecity acquisition, as compared to cash used in investing activities of $529.0 million in the previous quarter. Cash used in financing activities was $376.4 million for the first quarter as compared to cash from financing activities of $2.2 billion in the previous quarter.
As of March 31, 2016, the Company's cash, cash equivalents and investments were $650.1 million, as compared to $2,246.3 million as of December 31, 2015.
Business Outlook
Equinix guidance includes forecasted results for Telecity from January 15, 2016 and Bit-isle for the full year of 2016. As previously announced, Equinix expects to divest eight assets, seven from Telecity along with Equinix's London 2 IBX center (LD2), as part of regulatory clearance for the transaction received on November 13, 2015. The Company expects to complete these divestitures by mid-2016. The Company's guidance does not include the seven Telecity assets, which will be treated as discontinued operations, but does assume 6 months, or $6.2 million in revenues, from LD2, which is under a different accounting treatment that requires results to be reported as continuing operations until completion of the sale.
For the second quarter of 2016, the Company expects revenues to range between $893.0 and $899.0 million, or a normalized and constant currency growth rate of 2.5% quarter over quarter. This guidance includes a positive foreign currency impact of $12.6 million when compared to the average FX rates in Q1 2016. Cash gross margins are expected to approximate 67-68%. Cash selling, general and administrative expenses are expected to range between $195.0 and $201.0 million. Adjusted EBITDA is expected to range between $403.0 and $409.0 million, which includes a $6.8 million positive foreign currency impact when compared to the average FX rates in Q1 2016 and $15.2 million in integration costs from the two acquisitions. Capital expenditures are expected to range between $322.0 and $342.0 million, which includes approximately $42.0 million of recurring capital expenditures and $280.0 to $300.0 million of non-recurring capital expenditures.
For the full year of 2016, total revenues are expected to be greater than $3,595.0 million, an organic and constant currency growth rate of greater than 13.4% year over year. This guidance includes a positive foreign currency impact of $42.4 million on revenues when compared to prior Equinix guidance rates, and includes an expected $565.0 million in revenues from the Telecity and Bit-isle acquisitions. Total year cash gross margins are expected to approximate 67-68%. Cash selling, general and administrative expenses are expected to range between $775.0 and $795.0 million. Adjusted EBITDA is expected to be greater than $1,650.0 million, or a year over year organic and constant currency growth rate of 16.2%. This guidance includes $16.4 million of positive foreign currency impact on adjusted EBITDA when compared to prior Equinix guidance rates, an expected $255.0 million in adjusted EBITDA from the Telecity and Bit-isle acquisitions, as well as $55.0 million in integration costs for these two acquisitions. AFFO is expected to be greater than $1,015.0 million, including integration costs and $63.5 million foreign currency loss attributed to the Telecity acquisition. Capital expenditures are expected to range between $900.0 and $1,000.0 million, including approximately $145.0 million of recurring capital expenditures and $755.0 to $855.0 million of non-recurring capital expenditures.
The U.S. dollar exchange rates used for 2016 guidance, taking into consideration the impact of our foreign currency hedges, have been updated to $1.13 to the Euro, $1.49 to the Pound, S$1.36 to the U.S. dollar, ¥110.0 to the U.S. dollar and R$3.67 to the U.S. dollar. The 2016 global revenue breakdown by currency for the Euro, Pound, Japanese Yen, Singapore Dollar and Brazilian Real is 17%, 11%, 7%, 6% and 2%, respectively.
The guidance provided above is forward-looking and includes the impact of the Company's acquisition of Telecity, which closed on January 15, 2016. The adjusted EBITDA guidance is based on the revenue guidance less our expectations of cash cost of revenues and cash operating expenses. The AFFO guidance is based on the adjusted EBITDA guidance less our expectations of net interest expense, an installation revenue adjustment, a straight-line rent expense adjustment, amortization of deferred financing costs, gains (losses) on debt extinguishment, an income tax expense adjustment, recurring capital expenditures and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items.
Q1 Results Conference Call and Replay Information
The Company will discuss its quarterly results for the period ended March 31, 2016, along with its future outlook, in its quarterly conference call on Wednesday, May 4, 2016, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live webcast of the call will be available on the Company's Investor Relations website at www.equinix.com/investors. To hear the conference call live, please dial 1-210-234-8004 (domestic and international) and reference the passcode EQIX.
A replay of the call will be available one hour after the call, through Friday, July 22, 2016, by dialing 1-203-369-1542 and referencing the passcode 2016. In addition, the webcast will be available at www.equinix.com/investors. No password is required for the webcast.
Investor Presentation and Supplemental Financial Information
The Company has made available on its website a presentation designed to accompany the discussion of the Company's results and future outlook, along with certain supplemental financial information and other data. Interested parties may access this information through the Company's Investor Relations website at www.equinix.com/investors.
Additional Resources
-- Q1 2016 financial earnings press release (PDF)
-- Q1 2016 financial tables (PDF)
About Equinix
Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most interconnected data centers. In 40 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies.
Non-GAAP Financial Measures
The Company provides all information required in accordance with generally accepted accounting principles ("GAAP"), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, the Company uses non-GAAP financial measures to evaluate its operations.
In presenting non-GAAP financial measures, such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), adjusted EBITDA margins, free cash flow and adjusted free cash flow, the Company excludes certain items that it believes are not good indicators of the Company's current or future operating performance. These items are depreciation, amortization, accretion of asset retirement obligations and accrued restructuring charges, stock-based compensation, restructuring charges, impairment charges, acquisition costs, and gains on asset sales. The Company excludes these items in order for its lenders, investors, and the industry analysts who review and report on the Company to better evaluate the Company's operating performance and cash spending levels relative to its industry sector and competitors.
The Company excludes depreciation expense as these charges primarily relate to the initial construction costs of an IBX center, and do not reflect its current or future cash spending levels to support its business. Its IBX centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of an IBX center do not recur with respect to such data center, although the Company may incur initial construction costs in future periods with respect to additional IBX centers, and future capital expenditures remain minor relative to the initial investment. This is a trend it expects to continue. In addition, depreciation is also based on the estimated useful lives of the IBX centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX centers, and are not indicative of current or expected future capital expenditures. Therefore, the Company excludes depreciation from its operating results when evaluating its operations.
In addition, in presenting the non-GAAP financial measures, the Company also excludes amortization expense related to certain intangible assets, as it is not meaningful in evaluating the Company's current or future operating performance. The Company excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charges, as these expenses represent costs which the Company also believes are not meaningful in evaluating the Company's current operations. The Company excludes stock-based compensation expense as it represents expense attributed to equity awards that have no current or future cash obligations. As such, the Company, and many investors and analysts, exclude this stock-based compensation expense when assessing the cash generating performance of our operations. The Company excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to the Company's decision to exit leases for excess space adjacent to several of its IBX centers, which it did not intend to build out, or its decision to reverse such restructuring charges. The Company also excludes impairment charges related to certain long-lived assets. The impairment charges are related to expense recognized whenever events or changes in circumstances indicate that the carrying amount of long-lived assets are not recoverable. The Company also excludes gains on asset sales as it represents profit that may not recur and is not meaningful in evaluating the current or future operating performance. Finally, the Company excludes acquisition costs from its non-GAAP financial measures. The acquisition costs relate to costs the Company incurs in connection with business combinations. Management believes items such as restructuring charges, impairment charges, acquisition costs, and gains on asset sales are non-core transactions; however, these types of costs may occur in future periods.
The Company presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents income or loss from operations plus depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, acquisition costs and gains on asset sales.
The Company also presents funds from operations ("FFO") and adjusted funds from operations ("AFFO"), which are non-GAAP financial measures commonly used in the REIT industry. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income (loss), excluding gains (losses) from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. AFFO represents FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition costs, an installation revenue adjustment, a straight-line rent expense adjustment, amortization of deferred financing costs, gains (losses) on debt extinguishment, an income tax expense adjustment, recurring capital expenditures, net income from discontinued operations, net of tax and adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items. Equinix excludes depreciation expense, amortization expense, accretion, stock-based compensation, restructuring charges, impairment charges and acquisition charges for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.
The Company includes an adjustment for revenue from installation fees, since installation fees are deferred and recognized ratably over the expected life of the installation, although the fees are generally paid in a lump sum upon installation. The Company includes an adjustment for straight-line rent expense on its operating leases, since the total minimum lease payments are recognized ratably over the lease term, although the lease payments generally increase over the lease term. The adjustments for both installation revenue and straight-line rent expense are intended to isolate the cash activity included within the straight-lined or amortized results in the consolidated statement of operations. The Company excludes the amortization of deferred financing costs as these expenses relate to the initial costs incurred in connection with its debt financings that have no current or future cash obligations. The Company excludes gains (losses) on debt extinguishment since it represents a cost that may not recur and is not a good indicator of the Company's current or future operating performance. The Company includes an income tax expense adjustment, which represents changes in its income tax reserves and valuation allowances that may not recur or may not relate to the current year's operations. The Company also excludes recurring capital expenditures, which represent expenditures to extend the useful life of its IBX centers or other assets that are required to support current revenues. The Company also excludes net income from discontinued operations, net of tax, which represents profit that may not recur and is not a good indicator of our current or future operating performance.
Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP. Non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAPP financials measures. The Company presents such non-GAAP financial measures to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what management believes to be its core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods. The Company believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze the Company effectively.
Investors should note that the non-GAAP financial measures used by the Company may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as those of other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by us to similarly titled non-GAAP financial measures of other companies. Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income (loss) from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data. The Company intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenue from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; and other risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
Equinix and IBX are registered trademarks of Equinix, Inc. International Business Exchange is a trademark of Equinix, Inc.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Recurring revenues $797,094 $686,072 $609,657
Non-recurring revenues 47,062 44,390 33,517
------ ------ ------
Revenues 844,156 730,462 643,174
Cost of revenues 427,680 351,968 298,313
------- ------- -------
Gross
profit 416,476 378,494 344,861
------- ------- -------
Operating expenses:
Sales and
marketing 106,590 88,439 78,616
General and
administrative 165,904 136,829 113,640
Acquisition costs 36,536 17,349 1,156
Gains on asset
sales (5,242) - -
Total
operating
expenses 303,788 242,617 193,412
------- ------- -------
Income from continuing operations 112,688 135,877 151,449
------- ------- -------
Interest and other income (expense):
Interest
income 925 1,206 520
Interest expense (100,863) (79,499) (68,791)
Loss on debt
extinguishment - (289) -
Other expense (60,710) (48,617) (514)
Total
interest
and other,
net (160,648) (127,199) (68,785)
-------- -------- -------
Income (loss) from continuing
operations before income taxes (47,960) 8,678 82,664
Income tax
benefit
(expense) 10,633 2,053 (6,212)
-----------
Net income (loss) from continuing
operations (37,327) 10,731 76,452
Net income from
discontinued
operations, net
of tax 6,216 - -
Net income (loss) $(31,111) $10,731 $76,452
======== ======= =======
Net income (loss) per share:
Basic net income
(loss) per share
from continuing
operations $(0.55) $0.18 $1.35
Basic net income
(loss) per share
from
discontinued
operations 0.09 - -
Basic net income
(loss) per share $(0.46) $0.18 $1.35
=================
Diluted net
income (loss)
per share from
continuing
operations $(0.55) $0.18 $1.34
Diluted net
income (loss)
per share from
discontinued
operations 0.09 - -
Diluted net
income (loss)
per share $(0.46) $0.18 $1.34
==============
Shares used in
computing basic
net income
(loss) per share 68,132 60,393 56,661
===============
Shares used in
computing
diluted net
income (loss)
per share 68,132 60,943 57,227
===============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Net income (loss) $(31,111) $10,731 $76,452
-------- ------- -------
Other comprehensive income (loss), net of tax:
Foreign
currency
translation
adjustment
("CTA") gain
(loss) 111,415 (37,217) (146,311)
Unrealized
gain (loss)
on
available-
for-sale
securities (304) (139) 103
Unrealized
gain (loss)
on cash flow
hedges (6,784) 4,975 10,556
Net
investment
hedge CTA
gain (loss) (11,828) 10,447 -
Net actuarial
gain on
defined
benefit
plans 6 887 59
Other comprehensive income
(loss), net of tax: 92,505 (21,047) (135,593)
------ ------- --------
Comprehensive income (loss),
net of tax 61,394 (10,316) (59,141)
====== ======= =======
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets March 31, December 31,
2016 2015
---- ----
Cash and cash equivalents $633,758 $2,228,838
Short-term investments 12,353 12,875
Accounts receivable, net 326,440 291,964
Current portion of restricted cash 3,420 479,417
Other current assets 236,466 212,929
Assets held for sale 955,904 33,257
Total current
assets 2,168,341 3,259,280
Long-term investments 3,969 4,584
Property, plant and equipment, net 6,888,232 5,606,436
Goodwill 3,336,968 1,063,200
Intangible assets, net 867,536 224,565
Other assets 230,789 198,630
-------
Total assets $13,495,835 $10,356,695
============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $475,343 $400,948
Accrued property and equipment 124,684 103,107
Current portion of capital lease and
other financing obligations 48,325 40,121
Current portion of mortgage and loans
payable 487,065 770,236
Current portion of convertible debt 148,282 146,121
Other current liabilities 171,925 192,286
Liabilities held for sale 124,571 3,535
Total current
liabilities 1,580,195 1,656,354
Capital lease and other financing
obligations, less current portion 1,552,145 1,287,139
Mortgage and loans payable, less
current portion 1,139,807 472,769
Senior notes 3,806,167 3,804,634
Other liabilities 598,416 390,413
-------
Total liabilities 8,676,730 7,611,309
-----------------
Common stock 69 62
Additional paid-in capital 6,973,460 4,838,444
Treasury stock (6,635) (7,373)
Accumulated dividends (1,591,908) (1,468,472)
Accumulated other comprehensive loss (416,554) (509,059)
Accumulated deficit (139,327) (108,216)
Total
stockholders'
equity 4,819,105 2,745,386
--------------
Total liabilities
and
stockholders'
equity $13,495,835 $10,356,695
==================
Ending headcount by geographic region is as follows:
Americas
headcount 2,371 2,329
EMEA headcount 2,019 1,188
Asia-Pacific
headcount 1,326 1,525
Total
headcount 5,716 5,042
===== =====
EQUINIX, INC.
SUMMARY OF DEBT PRINCIPAL OUTSTANDING
(in thousands)
(unaudited)
March 31, December 31,
2016 2015
---- ----
Capital lease and
other financing
obligations $1,600,470 $1,327,260
---------- ----------
Term loan, net of debt
discount and debt
issuance costs 1,124,490 454,503
Brazil financings, net
of debt issuance
costs 28,473 26,668
Mortgage payable and
other loans payable 473,909 436,212
Revolving credit
facility borrowings - 325,622
Plus: debt discount,
debt issuance costs
and premium, net 13,830 694
Total
mortgage
and loans
payable
principal 1,640,702 1,243,699
---------
Senior notes, net of
debt issuance costs 3,806,167 3,804,634
Plus: debt issuance
costs 43,833 45,366
Total
senior
notes
principal 3,850,000 3,850,000
----------
Convertible debt, net
of debt discount and
debt issuance costs 148,282 146,121
Plus: debt discount
and debt issuance
costs 1,800 3,961
Total
convertible
debt
principal 150,082 150,082
------------
Total debt principal
outstanding $7,241,254 $6,571,041
========== ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Cash flows from operating activities:
Net income (loss) $(31,111) $10,731 $76,452
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation,
amortization and
accretion 202,153 144,861 122,530
Stock-based
compensation 34,061 33,868 30,613
Amortization of
debt issuance
costs and debt
discounts 5,508 4,493 3,774
Gains on asset
sales (5,242) - -
Other items 4,871 5,741 4,162
Changes in
operating assets
and liabilities:
Accounts
receivable (11,312) (2,581) (30,791)
Income taxes,
net (28,656) (25,056) (12,555)
Accounts
payable and
accrued
expenses (40,217) 33,906 29,693
Other assets
and
liabilities (25,785) 29,155 8,933
Net cash provided by
operating activities 104,270 235,118 232,811
------- ------- -------
Cash flows from investing activities:
Purchases, sales and
maturities of
investments, net 3,419 (9,369) (4,706)
Business acquisitions,
net of cash acquired (1,601,627) (235,306) (10,247)
Purchases of real
estate (16,408) - (38,282)
Purchases of other
property, plant and
equipment (197,700) (280,612) (150,120)
Proceeds from asset
sales 22,825 - -
Other investing
activities 466,704 (3,709) 3,521
Net cash used in investing
activities (1,322,787) (528,996) (199,834)
---------- -------- --------
Cash flows from financing activities:
Proceeds from employee
equity awards 16,304 185 16,384
Payment of dividend
distributions (124,836) (230,452) (96,619)
Proceeds from public
offering of common
stock, net of
issuance costs - 829,496 -
Proceeds from loans
payable 701,250 707,108 -
Proceeds from senior
notes - 1,100,000 -
Repayment of capital
lease and other
financing obligations (33,232) (8,450) (5,296)
Repayment of mortgage
and loans payable (936,353) (185,823) (13,361)
Other financing
activities 499 (19,114) 98
Net cash provided by (used
in) financing activities (376,368) 2,192,950 (98,794)
-------- --------- -------
Effect of foreign currency exchange rates on cash and
cash equivalents (195) (5,703) (8,391)
---- ------ ------
Net increase (decrease) in cash and cash equivalents (1,595,080) 1,893,369 (74,208)
Cash and cash equivalents at beginning of period 2,228,838 335,469 610,917
Cash and cash equivalents at end of period $633,758 $2,228,838 $536,709
======== ========== ========
Supplemental cash flow
information:
Cash paid for
taxes $19,215 $29,165 $14,538
======= ======= =======
Cash paid for
interest $74,540 $73,044 $23,976
======= ======= =======
Free cash flow (1) $(1,221,936) $(284,509) $37,683
=========== ========= =======
Adjusted free cash flow (2) $396,663 $(33,081) $87,666
======== ======== =======
(1) We define free cash flow as net cash provided by operating
activities plus net cash provided by (used in) investing
activities
(excluding the net purchases, sales and
maturities of investments) as presented
below:
Net cash provided by
operating activities
as presented above $104,270 $235,118 $232,811
Net cash used in
investing activities
as presented above (1,322,787) (528,996) (199,834)
Purchases, sales and
maturities of
investments, net (3,419) 9,369 4,706
Free cash flow
(negative free
cash flow) $(1,221,936) $(284,509) $37,683
=========== ========= =======
(2) We define adjusted free cash flow as free cash flow (as
defined above) excluding any purchases of real estate,
acquisitions,
any excess tax benefits from employee equity awards, cash paid
for taxes associated with reclassifying our assets for
tax purposes triggered by our conversion into a real estate
investment trust ("REIT") and costs related to the
REIT conversion, as
presented below:
Free cash flow (as
defined above) $(1,221,936) $(284,509) $37,683
Less business
acquisitions, net of
cash 1,601,627 235,306 10,247
Less purchases of real
estate 16,408 - 38,282
Less excess tax
benefits from
employee equity
awards 564 (1,633) 708
Less cash paid for
taxes resulting from
the REIT conversion - 17,306 -
Less costs related to
the REIT conversion - 449 746
Adjusted free cash
flow $396,663 $(33,081) $87,666
======== ======== =======
We categorize our cash paid for taxes into cash paid for taxes
resulting from the REIT conversion (as defined above) and
other cash taxes paid.
Cash paid for taxes
resulting from the
REIT conversion $ - $17,306 $ -
Other cash taxes paid 19,215 11,859 14,538
Total cash paid
for taxes $19,215 $29,165 $14,538
======= ======= =======
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FROM CONTINUING OPERATIONS - NON-GAAP PRESENTATION
--------------------------------------------------------------------------------------------------
(in thousands)
(unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Recurring revenues $797,094 $686,072 $609,657
Non-recurring revenues 47,062 44,390 33,517
Revenues (1) 844,156 730,462 643,174
Cash cost of revenues (2) 271,100 227,956 192,130
------- ------- -------
Cash gross profit (3) 573,056 502,506 451,044
------- ------- -------
Cash operating expenses (4):
Cash sales and marketing
expenses (5) 79,692 72,069 63,820
Cash general and
administrative expenses
(6) 112,714 97,292 81,476
Total cash operating expenses
(7) 192,406 169,361 145,296
------- ------- -------
Adjusted EBITDA (8) $380,650 $333,145 $305,748
======== ======== ========
Cash gross margins (9) 68% 69% 70%
=== === ===
Adjusted EBITDA margins (10) 45% 46% 48%
=== === ===
Adjusted EBITDA flow-through rate (11) 42% 27% 225%
=== === ===
FFO (12) $115,875 $131,483 $179,190
======== ======== ========
AFFO (13) $209,846 $178,293 $221,756
======== ======== ========
Basic FFO per share (14) $1.70 $2.18 $3.16
===== ===== =====
Diluted FFO per share (14) $1.68 $2.14 $3.09
===== ===== =====
Basic AFFO per share (15) $3.08 $2.95 $3.91
===== ===== =====
Diluted AFFO per share (15) $2.98 $2.85 $3.77
===== ===== =====
(1) The geographic split of our revenues on a services basis is presented below:
Americas Revenues:
Colocation $282,321 $275,779 $257,932
Interconnection 85,936 83,168 75,086
Managed infrastructure 11,170 10,974 13,295
Other 729 817 741
Recurring
revenues 380,156 370,738 347,054
Non-recurring revenues 24,238 23,751 16,915
Revenues 404,394 394,489 363,969
------- ------- -------
EMEA Revenues:
Colocation 214,178 146,879 132,735
Interconnection 19,700 16,775 13,048
Managed infrastructure 18,560 7,619 5,783
Other 943 862 1,858
Recurring
revenues 253,381 172,135 153,424
Non-recurring revenues 14,475 10,519 11,199
Revenues 267,856 182,654 164,623
------- ------- -------
Asia-Pacific Revenues:
Colocation 123,394 112,498 90,878
Interconnection 21,569 18,979 13,524
Managed infrastructure 15,006 9,447 4,777
Other 3,588 2,275 -
Recurring
revenues 163,557 143,199 109,179
Non-recurring revenues 8,349 10,120 5,403
Revenues 171,906 153,319 114,582
------- ------- -------
Worldwide Revenues:
Colocation 619,893 535,156 481,545
Interconnection 127,205 118,922 101,658
Managed infrastructure 44,736 28,040 23,855
Other 5,260 3,954 2,599
Recurring
revenues 797,094 686,072 609,657
Non-recurring revenues 47,062 44,390 33,517
Revenues $844,156 $730,462 $643,174
======== ======== ========
(2) We define cash cost of revenues as cost of revenues less depreciation, amortization,
accretion and stock-based compensation as presented below:
Cost of revenues $427,680 $351,968 $298,313
Depreciation,
amortization and
accretion expense (153,583) (121,505) (103,877)
Stock-based compensation
expense (2,997) (2,507) (2,306)
Cash cost of
revenues $271,100 $227,956 $192,130
======== ======== ========
The geographic split of
our cash cost of
revenues is presented
below:
Americas cash cost of
revenues $109,020 $107,640 $95,162
EMEA cash cost of
revenues 101,509 64,089 58,494
Asia-Pacific cash cost
of revenues 60,571 56,227 38,474
Cash cost of
revenues $271,100 $227,956 $192,130
======== ======== ========
(3) We define cash gross profit as revenues less cash cost of revenues (as defined
above).
(4) We define cash operating expenses as operating expenses less depreciation,
amortization, stock-based compensation and acquisition costs. We also refer to
cash operating expenses as cash selling, general and administrative expenses or
"cash SG&A".
(5) We define cash sales and marketing expenses as sales and marketing expenses less
depreciation, amortization and stock-based compensation as presented below:
Sales and marketing
expenses $106,590 $88,439 $78,616
Depreciation and
amortization expense (17,127) (7,329) (6,085)
Stock-based compensation
expense (9,771) (9,041) (8,711)
Cash sales and
marketing
expenses $79,692 $72,069 $63,820
======= ======= =======
(6) We define cash general and administrative expenses as general and administrative
expenses less depreciation, amortization and stock-based compensation as presented
below:
General and
administrative expenses $165,904 $136,829 $113,640
Depreciation and
amortization expense (31,443) (16,027) (12,568)
Stock-based compensation
expense (21,747) (23,510) (19,596)
Cash general and
administrative
expenses $112,714 $97,292 $81,476
======== ======= =======
(7) Our cash operating expenses, or cash SG&A, as defined above, is presented below:
Cash sales and marketing
expenses $79,692 $72,069 $63,820
Cash general and
administrative expenses 112,714 97,292 81,476
Cash SG&A $192,406 $169,361 $145,296
======== ======== ========
The geographic split of
our cash operating
expenses, or cash SG&A,
is presented below:
Americas cash SG&A $110,914 $106,035 $96,073
EMEA cash SG&A 54,858 36,971 30,098
Asia-Pacific cash SG&A 26,634 26,355 19,125
Cash SG&A $192,406 $169,361 $145,296
======== ======== ========
(8) We define adjusted EBITDA as income from continuning operations plus depreciation,
amortization, accretion, stock-based compensation expense, acquisition costs and
gains on asset sales as presented below:
Income from continuing
operations $112,688 $135,877 $151,449
Depreciation,
amortization and
accretion expense 202,153 144,861 122,530
Stock-based compensation
expense 34,515 35,058 30,613
Acquisition costs 36,536 17,349 1,156
Gains on asset sales (5,242) - -
Adjusted EBITDA $380,650 $333,145 $305,748
======== ======== ========
The geographic split of our adjusted EBITDA is presented below:
Americas income from
continuing operations $88,539 $83,425 $81,466
Americas depreciation,
amortization and
accretion expense 76,720 73,023 66,811
Americas stock-based
compensation expense 24,329 25,576 23,491
Americas acquisition
costs 114 (1,210) 966
Americas gains on asset
sales (5,242) - -
Americas
adjusted EBITDA 184,460 180,814 172,734
------- ------- -------
EMEA income from
continuing operations (7,419) 34,011 45,541
EMEA depreciation,
amortization and
accretion expense 76,488 30,434 26,693
EMEA stock-based
compensation expense 6,235 4,348 3,607
EMEA acquisition costs 36,185 12,801 190
EMEA adjusted
EBITDA 111,489 81,594 76,031
------- ------ ------
Asia-Pacific income from
continuing operations 31,568 18,441 24,442
Asia-Pacific
depreciation,
amortization and
accretion expense 48,945 41,404 29,026
Asia-Pacific stock-
based compensation
expense 3,951 5,134 3,515
Asia-Pacific acquisition
costs 237 5,758 -
Asia-Pacific
adjusted EBITDA 84,701 70,737 56,983
------ ------ ------
Adjusted EBITDA $380,650 $333,145 $305,748
======== ======== ========
(9) We define cash gross margins as cash gross profit divided by revenues.
Our cash gross margins by geographic region is presented below:
Americas cash gross
margins 73% 73% 74%
===
EMEA cash gross margins 62% 65% 64%
===
Asia-Pacific cash gross
margins 65% 63% 66%
===
(10) We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA
margins 46% 46% 47%
===
EMEA adjusted EBITDA
margins 42% 45% 46%
===
Asia-Pacific adjusted
EBITDA margins 49% 46% 50%
===
(11) We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth
divided by incremental revenue growth as follows:
Adjusted EBITDA -current
period $380,650 $333,145 $305,748
Less adjusted EBITDA -
prior period (333,145) (321,472) (294,365)
Adjusted EBITDA
growth $47,505 $11,673 $11,383
======= ======= =======
Revenues - current period $844,156 $730,462 $643,174
Less revenues -prior
period (730,462) (686,649) (638,121)
Revenue growth $113,694 $43,813 $5,053
======== ======= ======
Adjusted EBITDA flow-
through rate 42% 27% 225%
===
(12) FFO is defined as net income (loss), excluding gains (losses) from the disposition
of real estate assets, depreciation and amortization on real estate assets and
adjustments for unconsolidated joint ventures' and non-controlling interests'
share of these items.
Net income (loss) $(31,111) $10,731 $76,452
Adjustments:
Real estate
depreciation
and
amortization 150,995 120,144 102,648
Gain/loss on
disposition of
real estate
property (4,037) 579 62
Adjustments for
FFO from
unconsolidated
joint ventures 28 29 28
FFO $115,875 $131,483 $179,190
======== ======== ========
(13) AFFO is defined as FFO, excluding depreciation and amortization expense on non-real
estate assets, accretion, stock-based compensation, restructuring charges,
impairment charges, acquisition costs, an installation revenue adjustment, a
straight-line rent expense adjustment, amortization of deferred financing costs,
gains (losses) on debt extinguishment, an income tax expense adjustment, net income
from discontined operations, net of tax, recurring capital expenditures and
adjustments from FFO to AFFO for unconsolidated joint ventures' and non-
controlling interests' share of these items.
FFO $115,875 $131,483 $179,190
Adjustments:
Installation
revenue
adjustment 3,354 5,843 8,654
Straight-line
rent expense
adjustment 1,133 1,462 3,201
Amortization of
deferred
financing costs 5,508 4,495 3,858
Stock-based
compensation
expense 34,515 35,058 30,613
Non-real estate
depreciation
expense 21,387 15,921 12,693
Amortization
expense 28,152 8,100 6,295
Accretion
expense 1,619 696 894
Recurring
capital
expenditures (31,815) (44,668) (22,373)
Loss on debt
extinguishment - 289 -
Acquisition
costs 36,536 17,349 1,156
Income tax
expense
adjustment (190) 2,279 (2,408)
Net Income from
discontinued
operations, net
of tax (6,216) - -
Adjustments for
AFFO from
unconsolidated
joint ventures (12) (14) (17)
AFFO $209,846 $178,293 $221,756
======== ======== ========
(14) The FFO used in the computation of basic and diluted FFO per share attributable to
Equinix is presented below:
FFO, basic $115,875 $131,483 $179,190
Interest on
convertible
debt 3,226 3,442 3,362
FFO, diluted $119,101 $134,925 $182,552
The shares used in the computation of basic and diluted FFO per share attributable
to Equinix is presented below:
Shares used in computing
basic net income per
share and FFO per share 68,132 60,393 56,661
Effect of dilutive
securities:
Convertible debt 1,969 2,041 1,942
Employee equity
awards 585 612 566
Shares used in computing
diluted FFO per share 70,686 63,046 59,169
======
(15) The AFFO used in the computation of basic and diluted AFFO per share attributable to
Equinix is presented below:
AFFO, basic $209,846 $178,293 $221,756
Interest on
convertible
debt 1,062 1,557 1,554
AFFO, diluted $210,908 $179,850 $223,310
The shares used in the computation of basic and diluted AFFO per share attributable
to Equinix is presented below:
Shares used in computing
basic net income per
share and AFFO per share 68,132 60,393 56,661
Effect of dilutive
securities:
Convertible debt 1,969 2,041 1,942
Employee equity
awards 585 612 566
Shares used in computing
diluted AFFO per share 70,686 63,046 59,169
======
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SOURCE Equinix, Inc.
