EQUINIX INC REDWOOD CITY, Calif., Oct. 29, 2014 /PRNewswire/ -- Equinix, Inc. (Nasdaq: EQIX), a global interconnection and data center company, today reported quarterly results for the quarter ended September 30, 2014. 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.
Revenues were $620.4 million for the third quarter, a 3% increase over the previous quarter and a 14% increase over the same quarter last year. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $588.4 million for the third quarter, a 2% increase over the previous quarter and a 14% increase over the same quarter last year. Non-recurring revenues were $32.0 million for the quarter. MRR churn for the third quarter was 1.9%, a decrease from the previous quarter and lower than prior guidance.
"Equinix delivered both revenue and adjusted EBITDA above the top end of our guidance range, despite significant currency headwinds," said Steve Smith, president and CEO of Equinix. "We are very pleased with our performance, driven by strength in the core business, global expansions with key customers and accelerated momentum in cloud. The robust growth of our ecosystems generated a record 5,700 additional cross-connects this quarter, 36% higher than our previous record, and reflects an increase in interconnection activity between our cloud, content and network customers."
Cost of revenues were $304.1 million for the third quarter, a 4% increase over the previous quarter and a 13% increase from the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $107.6 million for the quarter, which we refer to as cash cost of revenues, were $196.5 million for the quarter, a 3% increase over the previous quarter and a 13% increase over the same quarter last year. Gross margins for the quarter were 51%, down from 52% for the previous quarter and up from 50% for the same quarter last year. Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 68%, unchanged from the previous quarter and the same quarter last year.
Selling, general and administrative expenses were $181.5 million for the third quarter, a 3% decrease over the previous quarter and a 15% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization, accretion and stock-based compensation of $41.4 million for the quarter, which we refer to as cash selling, general and administrative expenses, were $140.1 million for the quarter, a 1% increase over the previous quarter and a 16% increase over the same quarter last year.
Interest expense was $63.8 million for the third quarter, a 5% decrease from the previous quarter and a 3% increase over the same quarter last year. The Company recorded income tax expense of $30.6 million for the third quarter as compared to income tax expense of $12.4 million in the same quarter last year.
Net income attributable to Equinix for the third quarter was $42.8 million. This represents a basic net income per share attributable to Equinix of $0.81 and a diluted net income per share attributable to Equinix of $0.79 based on a weighted average share count of 53.1 million and 55.2 million, respectively, for the third quarter of 2014.
Income from operations was $135.1 million for the third quarter, an 8% increase from the previous quarter and a 17% increase over the same quarter last year. Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges, impairment charges and acquisition costs, for the third quarter was $283.9 million, a 3% increase over the previous quarter and a 14% increase over the same quarter last year.
Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the third quarter, were $156.0 million.
The Company has repurchased approximately 1.8 million shares of its common stock under the $500 million share repurchase program authorized in December 2013, at an average price of $191.95 per share, for total consideration of $346.8 million from December 5, 2013 through October 24, 2014.
In July 2014, the Company purchased Riverwood Capital L.P.'s interest in ALOG Data Centers do Brasil S.A. ("ALOG"), the approximate 10% of ALOG owned by ALOG management and vested and outstanding stock options for common shares of ALOG for cash consideration of approximately $226.3 million. As a result, the Company owns 100% of the outstanding shares of ALOG. The Company has fully consolidated ALOG's results of operations in the Company's consolidated financial statements from the time the Company acquired a controlling equity interest in ALOG in April 2011.
The Company generated cash from operating activities of $216.4 million for the third quarter as compared to $99.0 million in the previous quarter and $206.6 million for the same quarter last year. The increase in cash from operating activities for the third quarter as compared to the previous quarter was primarily attributed to decreased tax payments related to both REIT and non-REIT related obligations and cash interest payments in the third quarter as compared to the previous quarter. Cash used in investing activities was $6.3 million in the third quarter as compared to cash provided by investing activities of $91.5 million in the previous quarter and cash used in investing activities of $331.0 million in the same quarter last year, primarily attributed to the purchase of a New York IBX data center and net sales and maturities of investments. Cash used in financing activities was $256.2 million for the third quarter as compared to cash used in financing activities of $278.9 million in the previous quarter and cash used in financing activities of $1.2 million in the same quarter last year.
As of September 30, 2014, the Company's cash, cash equivalents and investments were $501.1 million, as compared to $1,030.1 million as of December 31, 2013.
In October 2014, the Company's Board of Directors declared a special distribution of $416.0 million, or approximately $7.57 per share based on the number of shares outstanding on the declaration date (the "2014 Special Distribution"), to its common stockholders in connection with the Company's plan to convert to a real estate investment trust ("REIT"). The 2014 Special Distribution is payable on November 25, 2014 to the Company's common stockholders of record as of the close of business on October 27, 2014. Common stockholders can elect to receive payment of the 2014 Special Distribution in the form of stock or cash, with the total cash payment to all stockholders limited to no more than 20% of the total distribution.
Business Outlook
For the fourth quarter of 2014, the Company expects revenues to range between $627.0 and $631.0 million, which includes a negative foreign currency impact of approximately $11.0 million compared to the rates used from the Company's prior guidance. Cash gross margins are expected to approximate 68% to 69%. Cash selling, general and administrative expenses are expected to approximate $139.0 million. Adjusted EBITDA is expected to range between $291.0 and $295.0 million, which includes $6.0 million in professional fees and costs primarily related to the REIT conversion and a negative foreign currency impact of approximately $5.0 million compared to the rates used from the Company's prior guidance. Capital expenditures are expected to range between $210.0 and $230.0 million, comprised of approximately $35.0 million of recurring capital expenditures and $175.0 to $195.0 million of expansion capital expenditures.
For the full year of 2014, total revenues are expected to range between $2,433.0 and $2,437.0 million, or an as-reported 13% year over year growth rate, which includes a negative foreign currency impact of approximately $15.0 million compared to the rates used from the Company's prior guidance. Total year cash gross margins are expected to approximate 68% to 69%. Cash selling, general and administrative expenses are expected to approximate $553.0 million. Adjusted EBITDA for the year is expected to range between $1,110.0 and $1,114.0 million, which includes a negative foreign currency impact of approximately $8.0 million compared to the rates used from our prior guidance, and includes $32.0 million in professional fees and costs primarily related to the REIT conversion. Capital expenditures for 2014 are expected to range between $630.0 and $650.0 million, comprised of approximately $110.0 million of recurring capital expenditures and $520.0 to $540.0 million of expansion capital expenditures.
The U.S. dollar exchange rates used for 2014 guidance, taking into consideration the impact of our foreign currency hedges, have been updated to $1.32 to the Euro, $1.63 to the Pound, S$1.28 to the U.S. dollar and R$2.43 to the U.S. dollar. The 2014 global revenue breakdown by currency for the Euro, Pound, Singapore dollar and Brazilian Real is 15%, 9%, 7% and 4%, respectively.
Company Metrics and Q3 Results Presentation
The Company will discuss its results and guidance on its quarterly conference call on Wednesday, October 29, 2014, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live webcast of the call will be available over the internet at Equinix.com under the Investor Relations heading. To hear the conference call live, please dial 1-210-234-8004 (domestic and international) and reference the passcode (EQIX). A presentation to accompany the call, as well as the Company's Non-Financial Metrics tracking sheet, will also be available on the website.
A replay of the call will be available beginning on Wednesday, October 29, 2014, at 7:30 p.m. ET through Friday, January 30, 2015, by dialing 1-402-220-0203 and referencing the passcode (2014). In addition, the webcast will be available on the Investors section of the Company's website over the same time period. No password is required for the webcast.
About Equinix
Equinix, Inc. (Nasdaq: EQIX), connects more than 4,500 companies directly to their customers and partners inside the world's most networked data centers. Today, businesses leverage the Equinix interconnection platform in 32 strategic markets across the Americas, EMEA and Asia-Pacific. www.equinix.com.
Non-GAAP Financial Measures
Equinix 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, Equinix uses 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, adjusted free cash flow, discretionary free cash flow and adjusted discretionary free cash flow to evaluate its operations. In presenting these non-GAAP financial measures, Equinix 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 and acquisition costs. Legislative and regulatory requirements encourage use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. Equinix excludes these items in order for Equinix's lenders, investors, and industry analysts who review and report on the Company, to better evaluate the Company's operating performance and cash spending levels relative to its industry sector and competitors.
Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of our IBX centers and do not reflect our current or future cash spending levels to support our business. Our IBX centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of our IBX centers do not recur and future capital expenditures remain minor relative to our initial investment. This is a trend we expect to continue. In addition, depreciation is also based on the estimated useful lives of our IBX centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX centers, and are not indicative of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations.
In addition, in presenting the non-GAAP financial measures, Equinix excludes amortization expense related to certain intangible assets, as it represents a cost that may not recur and is not a good indicator of the Company's current or future operating performance. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charges, as these expenses represent costs which Equinix believes are not meaningful in evaluating the Company's current operations. Equinix excludes stock-based compensation expense as it primarily represents expense attributed to equity awards that have no current or future cash obligations. As such, we, and many investors and analysts, exclude this stock-based compensation expense when assessing the cash generating performance of our operations. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to the Company's decision to exit leases for excess space adjacent to several of our IBX centers, which we did not intend to build out, or our decision to reverse such restructuring charges or severance charges related to the Switch and Data acquisition. Equinix 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. Finally, Equinix 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 such items as restructuring charges, impairment charges and acquisition costs are non-core transactions; however, these types of costs will or may occur in future periods.
Our management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. However, we have presented such non-GAAP financial measures to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what management believes to be our core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures 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. Equinix believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze Equinix effectively.
Investors should note, however, that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. In addition, whenever Equinix uses such non-GAAP financial measures, it provides a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.
Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, 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. Equinix 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 Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Recurring revenues $588,437 $574,158 $515,566 $1,712,298 $1,511,902
Non-recurring revenues 32,004 31,003 27,518 93,357 76,187
------ ------ ------ ------ ------
Revenues 620,441 605,161 543,084 1,805,655 1,588,089
Cost of revenues 304,052 292,859 268,960 884,436 794,660
------- ------- ------- ------- -------
Gross profit 316,389 312,302 274,124 921,219 793,429
------- ------- ------- ------- -------
Operating expenses:
Sales and
marketing 72,185 75,254 61,619 214,867 179,373
General and
administrative 109,354 111,675 96,874 324,332 276,324
Restructuring
charges - - - - (4,837)
Acquisition costs (281) 676 438 580 6,626
Total
operating
expenses 181,258 187,605 158,931 539,779 457,486
------- ------- ------- ------- -------
Income from operations 135,131 124,697 115,193 381,440 335,943
------- ------- ------- ------- -------
Interest and other income (expense):
Interest
income 356 744 929 2,534 2,593
Interest expense (63,756) (66,874) (61,957) (199,450) (183,289)
Loss on debt
extinguishment - (51,183) - (51,183) (93,602)
Other income 1,811 681 985 3,170 3,294
Total
interest
and other,
net (61,589) (116,632) (60,043) (244,929) (271,004)
------- -------- ------- -------- --------
Income before income taxes 73,542 8,065 55,150 136,511 64,939
Income tax
benefit
(expense) (30,581) 2,014 (12,397) (42,134) (14,189)
-----------
Net income 42,961 10,079 42,753 94,377 50,750
Net (income) loss attributable to
redeemable non-controlling interests (120) 1,249 (282) 1,179 (1,252)
Net income attributable to Equinix $42,841 $11,328 $42,471 $95,556 $49,498
======= ======= ======= ======= =======
Net income per share attributable to Equinix:
Basic net income
per share (1) $0.81 $0.22 $0.86 $1.86 $1.00
=================
Diluted net
income per share
(1) $0.79 $0.22 $0.83 $1.84 $0.99
=================
Shares used in
computing basic
net income per
share 53,137 51,332 49,555 51,369 49,325
===============
Shares used in
computing
diluted net
income per share 55,238 51,652 53,581 54,502 50,050
=================
(1) The net income attributable to Equinix used in the computation of basic and diluted net income
per share attributed to Equinix is presented below:
Net income $42,961 $10,079 $42,753 $94,377 $50,750
Net (income) loss
attributable to
non-controlling
interests (120) 1,249 (282) 1,179 (1,252)
-----------------
Net income
attributable
to Equinix,
basic 42,841 11,328 42,471 95,556 49,498
Interest on
convertible debt 885 - 1,865 4,862 -
Net income
attributable
to Equinix,
diluted $43,726 $11,328 $44,336 $100,418 $49,498
======= ======= ======= ======== =======
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Net income $42,961 $10,079 $42,753 $94,377 $50,750
------- ------- ------- ------- -------
Other comprehensive income (loss), net of tax:
Foreign currency translation gain
(loss) (144,993) 23,081 78,113 (106,942) (25,107)
Unrealized gain (loss) on available
for sale securities (1,179) (74) 438 (414) 78
Unrealized gain on cash flow hedges 4,510 54 - 4,764 -
Other comprehensive income
(loss), net of tax: (141,662) 23,061 78,551 (102,592) (25,029)
-------- ------ ------ -------- -------
Comprehensive income (loss),
net of tax (98,701) 33,140 121,304 (8,215) 25,721
------- ------ ------- ------ ------
Net (income) loss attributable to
redeemable non-controlling interests (120) 1,249 (282) 1,179 (1,252)
Other comprehensive (income) loss
attributable to redeemable non-
controlling interests (18,304) (750) (200) (21,121) 4,340
--------
Comprehensive income (loss)
attributable to Equinix, net
of tax $(117,125) $33,639 $120,822 $(28,157) $28,809
========= ======= ======== ======== =======
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets September 30, December 31,
2014 2013
---- ----
Cash and cash equivalents $354,181 $261,894
Short-term investments 130,859 369,808
Accounts receivable, net 275,264 184,840
Other current assets 97,407 72,118
------ ------
Total current
assets 857,711 888,660
Long-term investments 16,075 398,390
Property, plant and equipment, net 4,983,376 4,591,650
Goodwill 1,024,555 1,042,153
Intangible assets, net 157,475 184,182
Other assets 422,808 387,324
------- -------
Total assets $7,462,000 $7,492,359
============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $303,669 $263,223
Accrued property and equipment 138,956 64,601
Current portion of capital lease and
other financing obligations 20,132 17,214
Current portion of mortgage and loans
payable 57,767 53,508
Other current liabilities 147,676 147,958
------- -------
Total current
liabilities 668,200 546,504
Capital lease and other financing
obligations, less current portion 1,172,356 914,032
Mortgage and loans payable, less
current portion 160,643 199,700
Senior notes 2,250,000 2,250,000
Convertible debt 322,757 724,202
Other liabilities 290,364 274,955
------- -------
Total
liabilities 4,864,320 4,909,393
------------
Redeemable non-controlling interests - 123,902
--- -------
Common stock 54 50
Additional paid-in capital 2,870,752 2,693,887
Treasury stock (94,759) (84,663)
Accumulated other comprehensive loss (237,480) (113,767)
Retained earnings (accumulated
deficit) 59,113 (36,443)
------ -------
Total
stockholders'
equity 2,597,680 2,459,064
------------
Total
liabilities,
redeemable non-
controlling
interests
and
stockholders'
equity $7,462,000 $7,492,359
==============
Ending headcount by geographic region is as follows:
Americas
headcount 2,111 1,984
EMEA headcount 983 899
Asia-Pacific
headcount 696 617
Total headcount 3,790 3,500
===== =====
EQUINIX, INC.
SUMMARY OF DEBT OUTSTANDING
(in thousands)
(unaudited)
September 30, December 31,
2014 2013
---- ----
Capital
lease
and
other
financing
obligations $1,192,488 $931,246
---------- --------
U.S.
term
loan 110,000 140,000
ALOG
financings 59,317 67,882
Mortgage
payable 39,052 43,497
Other
loans
payable 10,041 1,829
Total mortgage and loans
payable 218,410 253,208
-------
Senior
notes 2,250,000 2,250,000
--------- ---------
Convertible
debt,
net
of
debt
discount 322,757 724,202
Plus:
debt
discount 13,905 45,508
Total convertible debt
principal 336,662 769,710
-------
Total
debt
outstanding $3,997,560 $4,204,164
========== ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Cash flows from operating activities:
Net income (loss) $42,961 $10,079 $42,753 $94,377 $50,750
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation,
amortization and
accretion 121,349 116,074 105,534 351,033 324,326
Stock-based
compensation 27,662 33,830 27,280 86,473 75,310
Debt issuance
costs and debt
discount 3,714 4,717 5,965 14,840 17,602
Loss on debt
extinguishment - 51,183 - 51,183 93,602
Restructuring
charges - - - - (4,837)
Excess tax
benefits from
employee equity
awards (5,825) (1,614) (4,951) (17,457) (27,372)
Other reconciling
items 5,957 7,455 4,595 18,704 11,629
Changes in
operating assets
and liabilities:
Accounts
receivable (50,889) (24,510) 3,469 (104,394) (40,292)
Income taxes,
net 23,340 (76,764) 3,989 (69,173) (71,567)
Accounts
payable and
accrued
expenses 34,778 (23,002) 17,003 20,606 17,399
Other assets
and
liabilities 13,394 1,516 925 40,931 (8,648)
Net cash provided by
operating activities 216,441 98,964 206,562 487,123 437,902
------- ------ ------- ------- -------
Cash flows from investing activities:
Purchases, sales and
maturities of
investments, net 148,789 250,737 (89,219) 621,180 (497,777)
Purchase of New York
IBX data center - - (70,481) - (73,441)
Purchase of Asia Tone,
less cash acquired - - 862 - 755
Purchases of real
estate - - (2,244) (16,791) (2,244)
Purchases of other
property, plant and
equipment (156,003) (159,816) (171,035) (421,726) (369,565)
Other investing
activities 898 582 1,159 1,409 6,321
Net cash provided by (used
in) investing activities (6,316) 91,503 (330,958) 184,072 (935,951)
------ ------ -------- ------- --------
Cash flows from financing activities:
Purchases of treasury
stock (42,575) (208,263) - (297,958) -
Proceeds from employee
equity awards 12,362 1,434 12,202 28,183 28,082
Purchase of redeemable
non-controlling
interests (226,276) - - (226,276) -
Proceeds from senior
notes - - - - 1,500,000
Repayment of capital
lease and other
financing obligations (3,857) (5,033) (4,553) (13,140) (12,226)
Repayment of mortgage
and loans payable (10,416) (16,777) (10,113) (37,510) (42,304)
Repayment of senior
notes - - - - (750,000)
Repayment of
convertible debt - (29,479) - (29,479) -
Debt extinguishment
costs - (22,552) (3,750) (22,552) (84,675)
Debt issuance costs - - (1,649) - (22,435)
Excess tax benefits
from employee equity
awards 5,825 1,614 4,951 17,457 27,372
Other financing
activities 8,698 128 1,734 8,826 1,734
Net cash provided by (used
in) financing activities (256,239) (278,928) (1,178) (572,449) 645,548
-------- -------- ------ -------- -------
Effect of foreign currency exchange rates on cash and
cash equivalents (8,039) 1,621 7,820 (6,459) 30
------ ----- ----- ------ ---
Net increase (decrease) in cash and cash equivalents (54,153) (86,840) (117,754) 92,287 147,529
Cash and cash equivalents at beginning of period 408,334 495,174 517,496 261,894 252,213
Cash and cash equivalents at end of period $354,181 $408,334 $399,742 $354,181 $399,742
======== ======== ======== ======== ========
Supplemental cash flow
information:
Cash paid for
taxes $5,506 $75,371 $9,882 $110,790 $86,736
====== ======= ====== ======== =======
Cash paid for
interest $45,833 $79,517 $39,037 $167,735 $135,317
======= ======= ======= ======== ========
Free cash flow (1) $61,336 $(60,270) $(35,177) $50,015 $(272)
======= ======== ======== ======= =====
Adjusted free cash flow (2) $74,812 $12,119 $50,855 $190,306 $174,225
======= ======= ======= ======== ========
Ongoing capital expenditures (3) $45,549 $63,581 $41,064 $154,044 $115,271
======= ======= ======= ======== ========
Discretionary free cash flow (4) $170,892 $35,383 $165,498 $333,079 $322,631
======== ======= ======== ======== ========
Adjusted discretionary free cash flow (5) $184,368 $107,772 $179,667 $456,579 $422,198
======== ======== ======== ======== ========
(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 $216,441 $98,964 $206,562 $487,123 $437,902
Net cash provided by
(used in) investing
activities as
presented above (6,316) 91,503 (330,958) 184,072 (935,951)
Purchases, sales and
maturities of
investments, net (148,789) (250,737) 89,219 (621,180) 497,777
Free cash flow
(negative free
cash flow) $61,336 $(60,270) $(35,177) $50,015 $(272)
======= ======== ======== ======= =====
(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 planned conversion into a real estate investment trust
("REIT") and costs related to the planned REIT conversion, as presented below:
Free cash flow (as
defined above) $61,336 $(60,270) $(35,177) $50,015 $(272)
Less purchase of New
York IBX data center - - 70,481 - 73,441
Less purchase of Asia
Tone, less cash
acquired - - (862) - (755)
Less purchase of real
estate - - 2,244 16,791 2,244
Less excess tax
benefits from
employee equity
awards 5,825 1,614 4,951 17,457 27,372
Less cash paid for
taxes resulting from
the planned REIT
conversion 978 61,873 805 80,678 58,109
Less costs related to
the planned REIT
conversion 6,673 8,902 8,413 25,365 14,086
Adjusted free cash
flow $74,812 $12,119 $50,855 $190,306 $174,225
======= ======= ======= ======== ========
We categorize our cash paid for taxes into cash paid for taxes resulting from the planned REIT conversion (as
defined above) and other cash taxes paid.
Cash paid for taxes
resulting from the
planned REIT
conversion $978 $61,873 $805 $80,678 $58,109
Other cash taxes paid 4,528 13,498 9,077 30,112 28,627
Total cash paid
for taxes $5,506 $75,371 $9,882 $110,790 $86,736
====== ======= ====== ======== =======
(3) We refer to our purchases of other property, plant and equipment as our capital expenditures (or capex). We
categorize our capital expenditures into expansion and ongoing capex. Expansion capex is capex spent to build out
our new data centers and data center expansions. Our ongoing capex represents all of our other capex spending.
Ongoing capital
expenditures $45,549 $63,581 $41,064 $154,044 $115,271
Expansion capital
expenditures 110,454 96,235 129,971 267,682 254,294
Total capital
expenditures $156,003 $159,816 $171,035 $421,726 $369,565
======== ======== ======== ======== ========
(4) We define discretionary free cash flow as net cash provided by operating activities less ongoing capital
expenditures (as described above), as presented below:
Net cash provided by
operating activities,
as presented above $216,441 $98,964 $206,562 $487,123 $437,902
Less ongoing capital
expenditures (45,549) (63,581) (41,064) (154,044) (115,271)
Discretionary free
cash flow $170,892 $35,383 $165,498 $333,079 $322,631
======== ======= ======== ======== ========
(5) We define adjusted discretionary free cash flow as discretionary free cash flow (as defined above), excluding any
excess tax benefits from employee equity awards, cash paid for taxes associated with reclassifying our assets for
tax purposes triggered by our planned REIT conversion and costs related to the planned REIT conversion, as
presented below:
Discretionary free
cash flow (as defined
above) $170,892 $35,383 $165,498 $333,079 $322,631
Excess tax benefits
from employee equity
awards 5,825 1,614 4,951 17,457 27,372
Cash paid for taxes
resulting from the
planned REIT
conversion 978 61,873 805 80,678 58,109
Costs related to the
planned REIT
conversion 6,673 8,902 8,413 25,365 14,086
Adjusted
discretionary
free cash flow $184,368 $107,772 $179,667 $456,579 $422,198
======== ======== ======== ======== ========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION
-----------------------------------------------------------------------
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Recurring revenues $588,437 $574,158 $515,566 $1,712,298 $1,511,902
Non-recurring revenues 32,004 31,003 27,518 93,357 76,187
Revenues (1) 620,441 605,161 543,084 1,805,655 1,588,089
Cash cost of revenues (2) 196,458 190,901 174,111 571,607 504,542
------- ------- ------- ------- -------
Cash gross profit (3) 423,983 414,260 368,973 1,234,048 1,083,547
------- ------- ------- --------- ---------
Cash operating expenses (4):
Cash sales and marketing
expenses (5) 58,434 58,785 48,172 173,018 140,882
Cash general and
administrative expenses
(6) 81,688 80,198 72,356 241,504 205,297
Total cash operating
expenses (7) 140,122 138,983 120,528 414,522 346,179
------- ------- ------- ------- -------
Adjusted EBITDA (8) $283,861 $275,277 $248,445 $819,526 $737,368
======== ======== ======== ======== ========
Cash gross margins (9) 68% 68% 68% 68% 68%
=== === === === ===
Adjusted EBITDA margins (10) 46% 45% 46% 45% 46%
=== === === === ===
Adjusted EBITDA flow-through rate (11) 56% 59% 3% 35% 40%
=== === === === ===
(1) The geographic split of our revenues on a
services basis is presented below:
Americas Revenues:
Colocation $244,979 $242,873 $230,583 $724,466 $680,158
Interconnection 69,512 66,451 61,984 200,265 179,990
Managed infrastructure 15,214 14,885 12,905 43,211 39,619
Rental 978 943 818 2,873 1,723
Recurring
revenues 330,683 325,152 306,290 970,815 901,490
Non-recurring revenues 16,729 17,104 13,123 48,886 37,183
Revenues 347,412 342,256 319,413 1,019,701 938,673
------- ------- ------- --------- -------
EMEA Revenues:
Colocation 130,873 127,132 108,906 380,181 313,354
Interconnection 13,163 12,329 9,233 36,858 26,468
Managed infrastructure 7,179 7,434 6,215 21,478 16,198
Rental 1,588 1,730 116 5,036 374
Recurring
revenues 152,803 148,625 124,470 443,553 356,394
Non-recurring revenues 8,777 8,537 8,784 26,619 23,838
Revenues 161,580 157,162 133,254 470,172 380,232
------- ------- ------- ------- -------
Asia-Pacific Revenues:
Colocation 86,613 82,655 69,080 245,101 207,975
Interconnection 12,973 12,189 10,433 36,520 29,536
Managed infrastructure 5,364 5,537 5,293 16,308 16,507
Recurring
revenues 104,951 100,381 84,806 297,930 254,018
Non-recurring revenues 6,498 5,362 5,611 17,852 15,166
Revenues 111,449 105,743 90,417 315,782 269,184
------- ------- ------ ------- -------
Worldwide Revenues:
Colocation 462,465 452,660 408,569 1,349,748 1,201,487
Interconnection 95,648 90,969 81,650 273,643 235,994
Managed infrastructure 27,757 27,856 24,413 80,997 72,324
Rental 2,566 2,673 934 7,909 2,097
Recurring
revenues 588,437 574,158 515,566 1,712,298 1,511,902
Non-recurring revenues 32,004 31,003 27,518 93,357 76,187
Revenues $620,441 $605,161 $543,084 $1,805,655 $1,588,089
======== ======== ======== ========== ==========
(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 $304,052 $292,859 $268,960 $884,436 $794,660
Depreciation, amortization
and accretion expense (105,449) (99,730) (92,579) (306,586) (284,452)
Stock-based compensation
expense (2,145) (2,228) (2,270) (6,243) (5,666)
Cash cost of
revenues $196,458 $190,901 $174,111 $571,607 $504,542
======== ======== ======== ======== ========
The geographic split of our cash cost of
revenues is presented below:
Americas cash cost of
revenues $97,775 $94,684 $92,882 $283,496 $270,496
EMEA cash cost of revenues 59,593 58,727 47,924 176,436 138,857
Asia-Pacific cash cost of
revenues 39,090 37,490 33,305 111,675 95,189
Cash cost of
revenues $196,458 $190,901 $174,111 $571,607 $504,542
======== ======== ======== ======== ========
(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 $72,185 $75,254 $61,619 $214,867 $179,373
Depreciation and
amortization expense (6,495) (8,526) (6,197) (19,650) (18,695)
Stock-based compensation
expense (7,256) (7,943) (7,250) (22,199) (19,796)
Cash sales and
marketing
expenses $58,434 $58,785 $48,172 $173,018 $140,882
======= ======= ======= ======== ========
(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 $109,354 $111,675 $96,874 $324,332 $276,324
Depreciation and
amortization expense (9,405) (7,818) (6,758) (24,797) (21,179)
Stock-based compensation
expense (18,261) (23,659) (17,760) (58,031) (49,848)
Cash general and
administrative
expenses $81,688 $80,198 $72,356 $241,504 $205,297
======= ======= ======= ======== ========
(7) Our cash operating expenses, or cash SG&A, as defined above, is presented below:
Cash sales and marketing
expenses $58,434 $58,785 $48,172 $173,018 $140,882
Cash general and
administrative expenses 81,688 80,198 72,356 241,504 205,297
Cash SG&A $140,122 $138,983 $120,528 $414,522 $346,179
======== ======== ======== ======== ========
The geographic split of our cash operating expenses, or cash SG&A, is presented below:
Americas cash SG&A $89,562 $89,447 $76,227 $268,442 $219,065
EMEA cash SG&A 32,201 33,084 28,191 95,394 84,818
Asia-Pacific cash SG&A 18,359 16,452 16,110 50,686 42,296
Cash SG&A $140,122 $138,983 $120,528 $414,522 $346,179
======== ======== ======== ======== ========
(8) We define adjusted EBITDA as income from operations plus depreciation, amortization, accretion, stock-based compensation
expense and acquisition costs as presented below:
Income from operations $135,131 $124,697 $115,193 $381,440 $335,943
Depreciation, amortization
and accretion expense 121,349 116,074 105,534 351,033 324,326
Stock-based compensation
expense 27,662 33,830 27,280 86,473 75,310
Acquisition costs (281) 676 438 580 6,626
Adjusted EBITDA $283,861 $275,277 $248,445 $819,526 $737,368
======== ======== ======== ======== ========
The geographic split of our adjusted EBITDA is presented below:
Americas income from
operations $72,614 $67,739 $70,691 $212,088 $203,743
Americas depreciation,
amortization and
accretion expense 66,594 62,481 58,939 188,008 187,384
Americas stock-based
compensation expense 21,148 27,177 20,591 67,118 57,203
Americas acquisition costs (281) 728 83 549 5,619
Americas adjusted
EBITDA 160,075 158,125 150,304 467,763 449,112
------- ------- ------- ------- -------
EMEA income from
operations 38,848 34,067 28,685 102,818 75,034
EMEA depreciation,
amortization and
accretion expense 27,650 27,901 24,503 85,453 70,998
EMEA stock-based
compensation expense 3,288 3,385 3,596 9,990 9,699
EMEA acquisition costs - (2) 355 81 826
EMEA adjusted
EBITDA 69,786 65,351 57,139 198,342 156,557
------ ------ ------ ------- -------
Asia-Pacific income from
operations 23,669 22,891 15,817 66,534 57,166
Asia-Pacific
depreciation,
amortization and
accretion expense 27,105 25,692 22,092 77,572 65,944
Asia-Pacific stock-based
compensation expense 3,226 3,268 3,093 9,365 8,408
Asia-Pacific acquisition
costs - (50) - (50) 181
Asia-Pacific
adjusted EBITDA 54,000 51,801 41,002 153,421 131,699
------ ------ ------ ------- -------
Adjusted EBITDA $283,861 $275,277 $248,445 $819,526 $737,368
======== ======== ======== ======== ========
(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 72% 72% 71% 72% 71%
===
EMEA cash gross margins 63% 63% 64% 62% 63%
===
Asia-Pacific cash gross
margins 65% 65% 63% 65% 65%
===
(10) We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA
margins 46% 46% 47% 46% 48%
===
EMEA adjusted EBITDA
margins 43% 42% 43% 42% 41%
===
Asia-Pacific adjusted
EBITDA margins 48% 49% 45% 49% 49%
===
(11) We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as
follows:
Adjusted EBITDA -current
period $283,861 $275,277 $248,445 $819,526 $737,368
Less adjusted EBITDA -
prior period (275,277) (260,388) (248,035) (760,010) (681,122)
Adjusted EBITDA
growth $8,584 $14,889 $410 $59,516 $56,246
====== ======= ==== ======= =======
Revenues - current period $620,441 $605,161 $543,084 $1,805,655 $1,588,089
Less revenues -prior
period (605,161) (580,053) (528,871) (1,636,632) (1,446,424)
Revenue growth $15,280 $25,108 $14,213 $169,023 $141,665
======= ======= ======= ======== ========
Adjusted EBITDA flow-
through rate 56% 59% 3% 35% 40%
===
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SOURCE Equinix, Inc.
