8-K
EQUINIX INC (EQIX)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): February 15, 2023 |
|---|
EQUINIX, INC.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-40205 | 77-0487526 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| One Lagoon Drive | ||
| Redwood City, California | 94065 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: 650 598-6000 | ||
| --- |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.001 | EQIX | The Nasdaq Stock Market LLC |
| 0.250% Senior Notes due 2027 | N/A | The Nasdaq Stock Market LLC |
| 1.000% Senior Notes due 2033 | N/A | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition
On February 15, 2023, Equinix, Inc. (“Equinix”) issued a press release and will hold a conference call regarding its financial results for the fourth quarter and full year ended December 31, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Equinix is making reference to certain non-GAAP financial information in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| 99.1 | Press Release of Equinix, Inc. dated February 15, 2023. |
|---|---|
| 104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EQUINIX, INC. | |||
|---|---|---|---|
| Date: | February 15, 2023 | By: | /s/ Keith D, Taylor |
| Keith D. Taylor | |||
| Chief Financial Officer |
Exhibit 99.1
Equinix Reports Fourth-Quarter and Full-Year 2022 Results
Exceeds $7 Billion in Revenue with 80th Consecutive Quarter of Revenue Growth—the Longest Streak of Any S&P 500 Company
REDWOOD CITY, Calif., Feb. 15, 2023 /PRNewswire/ --
- 2022 annual revenues increased 9% year-over-year on an as-reported basis and 11% on a normalized and constant currency basis to $7.3 billion
- Delivered seventh consecutive quarter of record channel bookings, accounting for nearly 40% of total bookings and approximately 60% of new logos
- Closed over 17,000 deals across more than 6,000 customers in 2022
- 2023 financial outlook at or above company's previously disclosed long-term targets shared at the June 2021 Analyst Day
- Increases quarterly cash dividend by 10% to $3.41 per share on its common stock due to strong operating performance
Equinix, Inc. (Nasdaq: EQIX), the world's digital infrastructure company^TM^, today reported results for the quarter and year ended December 31, 2022. Equinix 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. All per-share results are presented on a fully diluted basis.
2022 Results Summary
- Revenues
- $7.263 billion, a 9% increase over the previous year on an as-reported basis or 11% on a normalized and constant currency basis
- Operating Income
- $1.201 billion, an 8% increase over the previous year, and an operating margin of 17%, largely due to strong operating performance offset in part by increased investments to support the expanded scale and reach of the business
- Net Income and Net Income per Share attributable to Equinix
- $705 million, a 41% increase over the previous year, primarily due to operating performance strength and loss on debt extinguishment in 2021; partially offset by higher income taxes
- $7.67 per share, a 39% increase over the previous year
- Adjusted EBITDA
- $3.370 billion, a 46% adjusted EBITDA margin
- Includes $20 million of integration costs
- AFFO and AFFO per Share
- $2.714 billion, an 11% increase over the previous year on both an as-reported and normalized and constant currency basis
- $29.55 per share, a 9% increase over the previous year or a normalized and constant currency increase of 11%
- Includes $20 million of integration costs
2023 Annual Guidance Summary
- Revenues
- $8.145 - $8.245 billion, a 12 - 14% increase over the previous year or a normalized and constant currency increase of 14 - 15%
- Adjusted EBITDA
- $3.615 - $3.695 billion, a 45% adjusted EBITDA margin after taking into consideration power price increases to revenues and corresponding power cost increases
- Assumes $35 million of integration costs
- AFFO and AFFO per Share
- $2.883 - $2.963 billion, an increase of 6 - 9% over the previous year or a normalized and constant currency increase of 9 - 12%
- $30.79 - $31.64 per share, an increase of 4 - 7% over the previous year or a normalized and constant currency increase of 8 - 10%. This guidance excludes any capital market activities the company may undertake in the future
- Assumes $35 million of integration costs
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 without unreasonable effort. The impact of such adjustments could be significant.
Equinix Quote Charles Meyers, CEO and President, Equinix:
"With IDC forecasting digital technology spend to grow eight times faster than the broader economy in 2023,^1^ today's businesses are seeking the right infrastructure partner to support their specific digital transformation needs, especially in the current environment where operational efficiency and the need to create lasting business differentiation are strategic drivers. Our customers are validating the increasing demand for comprehensive solutions that offer 'the right cloud for them' with flexibility to place their workloads across multiple public clouds, private clouds and on-prem—and they are finding Equinix's global platform and interconnected ecosystems a unique environment to architect this customizable infrastructure."
Business Highlights
- As Equinix continues to extend its comprehensive platform to offer businesses a rich mix of physical and virtual solutions to access its interconnected ecosystem, the company made progress on digital services initiatives in Q4 that included:
- The November announcement with VMware of VMware Cloud on Equinix Metal^®^, which combines VMware-managed and supported cloud Infrastructure as a Service with Equinix's interconnected, global Bare Metal as a Service offering. The solution is aimed at offering customers a combination of on-premises security and control with high performance, data locality, and low overall total cost of ownership.
- An outline for the extension of its entire digital services portfolio to seven new metros. This 2023 plan includes launching Equinix Metal in Dublin, Manchester, Mexico City, Miami and Milan, and bringing Network Edge to Atlanta, Manchester, Mexico City and Seoul.
- Equinix further invested in the expansion of its global platform, which now encompasses more than 245 data centers across 71 metros in 32 countries:
- The 49 major projects currently underway across 35 metros and 23 countries represent the largest new-build pipeline in company history.
- In Q4, Equinix announced its first builds in Johannesburg, South Africa, and Johor, Malaysia. The new Johannesburg facility will augment Equinix's current African footprint in Nigeria, Ghana and Côte d'Ivoire by entering the largest and most digitally developed nation on the continent. The Johor expansion represents Equinix's entry into one of the most-requested markets in Asia-Pacific by global customers.
- In Q4, Equinix advanced its environmental sustainability commitments by becoming the first colocation data center operator to commit to more efficient temperature and humidity standards that will enable the company to reduce its overall power use by increasing operating temperature ranges within its data centers. By "adjusting the thermostat" to optimize data center energy use, Equinix is leading the industry and is expected to enable thousands of customers to reduce the Scope 3 carbon emissions associated with their data center operations, as supply chain sustainability becomes an increasingly important part of the overall environmental initiatives of today's businesses.
| ^__________________________________________^ |
|---|
| ^1^"IDC FutureScape: Worldwide Digital Business Strategies 2023 Predictions," Doc #CA49743822, October 2022. |
Business Outlook
For the first quarter of 2023, Equinix expects revenues to range between $1.965 and $1.995 billion, an increase of 5 - 7% over the previous quarter, or a normalized and constant currency increase of 5 - 6%. This guidance includes power price increases in EMEA, and a negative foreign currency impact of $24 million when compared to the average FX rates in Q4 2022. Adjusted EBITDA is expected to range between $891 and $921 million, which includes a negative foreign currency impact of $9 million when compared to the average FX rates in Q4 2022, a step-down in repairs & maintenance costs incurred in the quarter, although offset in part by increased seasonal salary and benefit costs of $17 million attributed to the FICA reset. Adjusted EBITDA includes $6 million of integration costs related to acquisitions. Recurring capital expenditures are expected to range between $18 and $28 million.
For the full year of 2023, total revenues are expected to range between $8.145 and $8.245 billion, a 12 - 14% increase over the previous year on an as-reported basis, or a 14 - 15% increase on a normalized and constant currency basis, and includes a foreign currency benefit of $267 million when compared to the prior Equinix guidance FX rates. Excluding the impact of power price increases, this guidance represents a 9 - 10% increase on a normalized and constant currency basis. Adjusted EBITDA is expected to range between $3.615 and $3.695 billion, an adjusted EBITDA margin of 45%. This adjusted EBITDA includes approximately 290 basis points of cumulative negative margin impact due to inflated power rates across EMEA and APAC markets and a foreign currency benefit of $123 million when compared to the prior Equinix guidance FX rates. For the year, the company expects to incur $35 million in integration costs related to acquisitions. AFFO is expected to range between $2.883 and $2.963 billion, a 6 - 9% increase over the previous year on an as-reported basis, or a 9 - 12% increase on a normalized and constant currency basis. This AFFO guidance includes $35 million in integration costs related to acquisitions. AFFO per share is expected to range between $30.79 and $31.64, a 4 - 7% increase over the previous year on an as-reported basis, or an 8 - 10% increase on a normalized and constant currency basis. This guidance excludes any capital market activities the company may undertake in the future. Non-recurring capital expenditures, including xScale^®^-related costs, are expected to range between $2.511 and $2.741 billion, and recurring capital expenditures are expected to range between $197 and $217 million. xScale-related on-balance sheet capital expenditures are expected to range between $131 and $181 million, which we anticipate will be reimbursed from both the current and future xScale JVs.
The U.S. dollar exchange rates used for 2023 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.10 to the Euro, $1.23 to the Pound, S$1.34 to the U.S. dollar, ¥131 to the U.S. dollar and R$5.29 to the U.S. dollar. The Q4 2022 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 17%, 9%, 8%, 6% and 3%, respectively.
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, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, income tax expense, an income tax expense adjustment, recurring capital expenditures, other income (expense), (gains) losses on disposition of real estate property, and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items.
Q4 2022 Results Conference Call and Replay Information
Equinix will discuss its quarterly results for the period ended December 31, 2022, along with its future outlook, in its quarterly conference call on Wednesday, February 15, 2023, 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 1-517-308-9482 (domestic and international) and reference the passcode EQIX.
A replay of the call will be available one hour after the call through Wednesday, April 26, 2023, by dialing 1-888-293-8912 and referencing the passcode 2023. In addition, the webcast will be available at www.equinix.com/investors (no password required).
Investor Presentation and Supplemental Financial Information
Equinix has made available on its website a presentation designed to accompany the discussion of Equinix's results and future outlook, along with certain supplemental financial information and other data. Interested parties may access this information through the Equinix Investor Relations website at www.equinix.com/investors.
Additional Resources
- Equinix Investor Relations Resources
About Equinix
Equinix (Nasdaq: EQIX) is the world's digital infrastructure company, enabling digital leaders to harness a trusted platform to bring together and interconnect the foundational infrastructure that powers their success. Equinix enables today's businesses to access all the right places, partners and possibilities they need to accelerate advantage. With Equinix, they can scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value.
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 to evaluate its operations.
Equinix provides normalized and constant currency growth rates, which are calculated to adjust for acquisitions, dispositions, integration costs, changes in accounting principles and foreign currency.
Equinix presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents net income excluding income tax expense, interest income, interest expense, other income or expense, gain or loss on debt extinguishment, depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales.
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, Equinix excludes certain items that it believes are not good indicators of Equinix'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, transaction costs and gain or loss on asset sales. Equinix excludes these items in order for its lenders, investors and the industry analysts who review and report on Equinix to better evaluate Equinix'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 a data center, and do not reflect its current or future cash spending levels to support its business. Its data centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of a data center do not recur with respect to such data center, although Equinix may incur initial construction costs in future periods with respect to additional data 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 data centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our data 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 also excludes amortization expense related to acquired intangible assets. Amortization expense is significantly affected by the timing and magnitude of acquisitions, and these charges may vary in amount from period to period. We exclude amortization expense to facilitate a more meaningful evaluation of our current operating performance and comparisons to our prior periods. 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 also believes are not meaningful in evaluating Equinix's current operations. Equinix excludes stock-based compensation expense, as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, Equinix and many investors and analysts exclude stock-based compensation expense to compare its operating results with those of other companies. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to Equinix's decision to exit leases for excess space adjacent to several of its IBX^®^ data centers, which it did not intend to build out, or its decision to reverse such restructuring charges. Equinix also excludes impairment charges generally 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 assets are not recoverable. Equinix also excludes gain or loss on asset sales as it represents profit or loss that is not meaningful in evaluating the current or future operating performance. Finally, Equinix excludes transaction costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The transaction costs relate to costs Equinix incurs in connection with business combinations and formation of joint ventures, including advisory, legal, accounting, valuation and other professional or consulting fees. Such charges generally are not relevant to assessing the long-term performance of Equinix. In addition, the frequency and amount of such charges vary significantly based on the size and timing of the transactions. Management believes items such as restructuring charges, impairment charges, transaction costs and gain or loss on asset sales are non-core transactions; however, these types of costs may occur in future periods.
Equinix also presents funds from operations ("FFO") and adjusted funds from operations ("AFFO"), both commonly used in the REIT industry, as supplemental performance measures. Additionally, Equinix presents AFFO per share, which is also commonly used in the REIT industry. AFFO per share offers investors and industry analysts a perspective of Equinix's underlying operating performance when compared to other REIT companies. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income or loss, excluding gain or loss 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, stock-based charitable contributions, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, gain or loss on debt extinguishment, an income tax expense adjustment, recurring capital expenditures, net income or loss 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 transaction costs for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.
Equinix includes an adjustment for revenues from installation fees, since installation fees are deferred and recognized ratably over the period of contract term, although the fees are generally paid in a lump sum upon installation. Equinix 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. Equinix also includes an adjustment to contract costs incurred to obtain contracts, since contract costs are capitalized and amortized over the estimated period of benefit on a straight-line basis, although costs of obtaining contracts are generally incurred and paid during the period of obtaining the contracts. The adjustments for installation revenues, straight-line rent expense and contract costs are intended to isolate the cash activity included within the straight-lined or amortized results in the consolidated statement of operations. Equinix excludes the amortization of deferred financing costs and debt discounts and premiums as these expenses relate to the initial costs incurred in connection with its debt financings that have no current or future cash obligations. Equinix excludes gain or loss on debt extinguishment since it represents a cost that is not a good indicator of Equinix's current or future operating performance. Equinix includes an income tax expense adjustment, which represents the non-cash tax impact due to changes in valuation allowances and uncertain tax positions that do not relate to the current period's operations. Equinix excludes recurring capital expenditures, which represent expenditures to extend the useful life of its IBX and xScale data centers or other assets that are required to support current revenues. Equinix also excludes net income or loss from discontinued operations, net of tax, which represents results that are not a good indicator of our current or future operating performance.
Equinix presents constant currency results of operations, which is a non-GAAP financial measure and is not meant to be considered in isolation or as an alternative to GAAP results of operations. However, Equinix has presented this non-GAAP financial measure to provide investors with an additional tool to evaluate its operating results without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Equinix's business performance. To present this information, Equinix's current and comparative prior period revenues and certain operating expenses from entities with functional currencies other than the U.S. dollar are converted into U.S. dollars at a consistent exchange rate for purposes of each result being compared.
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 GAAP financial measures. Equinix presents such non-GAAP financial measures to provide investors with an additional tool to evaluate its 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. 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 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 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 or 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 without unreasonable effort. The impact of such adjustments could be significant. 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, risks to our business and operating results related to the COVID-19 pandemic; the current inflationary environment; foreign currency exchange rate fluctuations; increased costs to procure power and the general volatility in the global energy market; the challenges of acquiring, operating and constructing IBX and xScale data centers and developing, deploying and delivering Equinix products and solutions; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenues 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; risks related to our taxation as a REIT and other risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent and upcoming Equinix 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, INC. | ||||||
|---|---|---|---|---|---|---|
| Condensed Consolidated Statements of Operations | ||||||
| (in thousands, except per share data) | ||||||
| (unaudited) | ||||||
| Three Months Ended | Twelve Months Ended | |||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||
| Recurring revenues | $ 1,773,380 | $ 1,748,132 | $ 1,603,474 | $ 6,871,287 | $ 6,220,485 | |
| Non-recurring revenues | 97,465 | 92,527 | 102,904 | 391,818 | 415,052 | |
| Revenues | 1,870,845 | 1,840,659 | 1,706,378 | 7,263,105 | 6,635,537 | |
| Cost of revenues | 970,700 | 934,669 | 910,435 | 3,751,501 | 3,472,422 | |
| Gross profit | 900,145 | 905,990 | 795,943 | 3,511,604 | 3,163,115 | |
| Operating expenses: | ||||||
| Sales and marketing | 207,233 | 193,089 | 189,798 | 786,560 | 741,232 | |
| General and administrative | 400,183 | 375,483 | 343,711 | 1,498,701 | 1,301,797 | |
| Transaction costs | 10,529 | 2,007 | 9,405 | 21,839 | 22,769 | |
| (Gain) loss on asset sales | — | 2,252 | 3,304 | 3,976 | (10,845) | |
| Total operating expenses | 617,945 | 572,831 | 546,218 | 2,311,076 | 2,054,953 | |
| Income from operations | 282,200 | 333,159 | 249,725 | 1,200,528 | 1,108,162 | |
| Interest and other income (expense): | ||||||
| Interest income | 18,462 | 11,192 | 1,130 | 36,268 | 2,644 | |
| Interest expense | (94,200) | (91,346) | (80,227) | (356,337) | (336,082) | |
| Other expense | (28,895) | (6,735) | (5,802) | (51,417) | (50,647) | |
| Gain (loss) on debt extinguishment | 143 | 75 | 214 | 327 | (115,125) | |
| Total interest and other, net | (104,490) | (86,814) | (84,685) | (371,159) | (499,210) | |
| Income before income taxes | 177,710 | 246,345 | 165,040 | 829,369 | 608,952 | |
| Income tax expense | (48,807) | (34,606) | (41,899) | (124,792) | (109,224) | |
| Net income | 128,903 | 211,739 | 123,141 | 704,577 | 499,728 | |
| Net (income) loss attributable to non-controlling interests | (140) | 68 | 133 | (232) | 463 | |
| Net income attributable to Equinix | $ 128,763 | $ 211,807 | $ 123,274 | $ 704,345 | $ 500,191 | |
| Net income per share attributable to Equinix: | ||||||
| Basic net income per share | $ 1.39 | $ 2.30 | $ 1.37 | $ 7.69 | $ 5.57 | |
| Diluted net income per share | $ 1.39 | $ 2.30 | $ 1.36 | $ 7.67 | $ 5.53 | |
| Shares used in computing basic net income per share | 92,573 | 91,896 | 90,240 | 91,569 | 89,772 | |
| Shares used in computing diluted net income per share | 92,752 | 92,135 | 90,752 | 91,828 | 90,409 | |
| EQUINIX, INC. | ||||||
| --- | --- | --- | --- | --- | --- | |
| Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||||
| (in thousands) | ||||||
| (unaudited) | ||||||
| Three Months Ended | Twelve Months Ended | |||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||
| Net income | $ 128,903 | $ 211,739 | $ 123,141 | $ 704,577 | $ 499,728 | |
| Other comprehensive income (loss), net of tax: | ||||||
| Foreign currency translation adjustment ("CTA") gain (loss) | 796,716 | (703,640) | (115,278) | (769,886) | (559,969) | |
| Unrealized gain (loss) on cash flow hedges | (50,231) | 6,120 | 8,514 | 40,543 | 60,562 | |
| Net investment hedge CTA gain (loss) | (379,960) | 360,350 | 62,763 | 425,701 | 326,982 | |
| Net actuarial gain (loss) on defined benefit plans | (42) | (19) | 16 | (101) | 57 | |
| Total other comprehensive income (loss), net of tax | 366,483 | (337,189) | (43,985) | (303,743) | (172,368) | |
| Comprehensive income (loss), net of tax | 495,386 | (125,450) | 79,156 | 400,834 | 327,360 | |
| Net (income) loss attributable to non-controlling interests | (140) | 68 | 133 | (232) | 463 | |
| Other comprehensive (income) loss attributable to non-controlling interests | (12) | 28 | (5) | 48 | (15) | |
| Comprehensive income (loss) attributable to Equinix | $ 495,234 | $ (125,354) | $ 79,284 | $ 400,650 | $ 327,808 | |
| EQUINIX, INC. | ||||||
| --- | --- | --- | ||||
| Condensed Consolidated Balance Sheets | ||||||
| (in thousands) | ||||||
| (unaudited) | ||||||
| December 31, 2022 | December 31, 2021 | |||||
| Assets | ||||||
| Cash and cash equivalents | $ 1,906,421 | $ 1,536,358 | ||||
| Accounts receivable, net | 855,380 | 681,809 | ||||
| Other current assets | 459,138 | 462,739 | ||||
| Assets held for sale | 84,316 | 276,195 | ||||
| Total current assets | 3,305,255 | 2,957,101 | ||||
| Property, plant and equipment, net | 16,649,534 | 15,445,775 | ||||
| Operating lease right-of-use assets | 1,427,950 | 1,282,418 | ||||
| Goodwill | 5,654,217 | 5,372,071 | ||||
| Intangible assets, net | 1,897,649 | 1,935,267 | ||||
| Other assets | 1,376,137 | 926,066 | ||||
| Total assets | $ 30,310,742 | $ 27,918,698 | ||||
| Liabilities and Stockholders' Equity | ||||||
| Accounts payable and accrued expenses | $ 1,004,800 | $ 879,144 | ||||
| Accrued property, plant and equipment | 281,347 | 187,334 | ||||
| Current portion of operating lease liabilities | 139,538 | 144,029 | ||||
| Current portion of finance lease liabilities | 151,420 | 147,841 | ||||
| Current portion of mortgage and loans payable | 9,847 | 33,087 | ||||
| Other current liabilities | 251,346 | 214,519 | ||||
| Total current liabilities | 1,838,298 | 1,605,954 | ||||
| Operating lease liabilities, less current portion | 1,272,812 | 1,107,180 | ||||
| Finance lease liabilities, less current portion | 2,143,690 | 1,989,668 | ||||
| Mortgage and loans payable, less current portion | 642,708 | 586,577 | ||||
| Senior notes, less current portion | 12,109,539 | 10,984,144 | ||||
| Other liabilities | 797,863 | 763,411 | ||||
| Total liabilities | 18,804,910 | 17,036,934 | ||||
| Common stock | 93 | 91 | ||||
| Additional paid-in capital | 17,320,017 | 15,984,597 | ||||
| Treasury stock | (71,966) | (112,208) | ||||
| Accumulated dividends | (7,317,570) | (6,165,140) | ||||
| Accumulated other comprehensive loss | (1,389,446) | (1,085,751) | ||||
| Retained earnings | 2,964,838 | 2,260,493 | ||||
| Total Equinix stockholders' equity | 11,505,966 | 10,882,082 | ||||
| Non-controlling interests | (134) | (318) | ||||
| Total stockholders' equity | 11,505,832 | 10,881,764 | ||||
| Total liabilities and stockholders' equity | $ 30,310,742 | $ 27,918,698 | ||||
| Ending headcount by geographic region is as follows: | ||||||
| Americas headcount | 5,493 | 5,056 | ||||
| EMEA headcount | 3,936 | 3,611 | ||||
| Asia-Pacific headcount | 2,668 | 2,277 | ||||
| Total headcount | 12,097 | 10,944 | ||||
| EQUINIX, INC. | ||||||
| --- | --- | --- | ||||
| Summary of Debt Principal Outstanding | ||||||
| (in thousands) | ||||||
| (unaudited) | ||||||
| December 31, 2022 | December 31, 2021 | |||||
| Finance lease liabilities | $ 2,295,110 | $ 2,137,509 | ||||
| Term loans | 618,028 | 549,343 | ||||
| Mortgage payable and other loans payable | 34,527 | 70,321 | ||||
| Plus (minus): mortgage premium, debt discount and issuance costs, net | 1,062 | (1,276) | ||||
| Total mortgage and loans payable principal | 653,617 | 618,388 | ||||
| Senior notes | 12,109,539 | 10,984,144 | ||||
| Plus: debt discount and issuance costs | 117,351 | 117,986 | ||||
| Less: debt premium | — | — | ||||
| Total senior notes principal | 12,226,890 | 11,102,130 | ||||
| Total debt principal outstanding | $ 15,175,617 | $ 13,858,027 | ||||
| EQUINIX, INC. | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Condensed Consolidated Statements of Cash Flows | ||||||
| (in thousands) | ||||||
| (unaudited) | ||||||
| Three Months Ended | Twelve Months Ended | |||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||
| Cash flows from operating activities: | ||||||
| Net income | $ 128,903 | $ 211,739 | $ 123,141 | $ 704,577 | $ 499,728 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation, amortization and accretion | 438,492 | 431,668 | 428,764 | 1,739,374 | 1,660,524 | |
| Stock-based compensation | 107,519 | 101,830 | 96,379 | 403,983 | 363,774 | |
| Amortization of debt issuance costs and debt discounts and premiums | 4,553 | 4,533 | 4,375 | 17,826 | 17,135 | |
| (Gain) loss on debt extinguishment | (143) | (75) | (214) | (327) | 115,125 | |
| Loss (gain) on asset sales | — | 2,252 | 3,304 | 3,976 | (10,845) | |
| Other items | 44,880 | 10,536 | 6,089 | 67,298 | 34,499 | |
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | (56,209) | 29,823 | 109,440 | (153,415) | (1,873) | |
| Income taxes, net | (17,701) | 29,656 | 27,598 | (7,827) | (16,602) | |
| Accounts payable and accrued expenses | 31,511 | 103,941 | 54,628 | 114,600 | 64,596 | |
| Operating lease right-of-use assets | 36,171 | 38,684 | 37,862 | 149,094 | 140,590 | |
| Operating lease liabilities | (34,586) | (31,873) | (39,782) | (132,831) | (177,533) | |
| Other assets and liabilities | 76,799 | (112,425) | 40,521 | 56,854 | (141,912) | |
| Net cash provided by operating activities | 760,189 | 820,289 | 892,105 | 2,963,182 | 2,547,206 | |
| Cash flows from investing activities: | ||||||
| Purchases, sales and maturities of investments, net | (35,222) | (22,398) | (30,394) | (122,569) | (103,476) | |
| Business acquisitions, net of cash and restricted cash acquired | — | (80,342) | — | (964,010) | (158,498) | |
| Real estate acquisitions | (208,377) | (6,568) | (6,988) | (248,276) | (201,837) | |
| Purchases of other property, plant and equipment | (827,927) | (552,729) | (817,405) | (2,278,004) | (2,751,512) | |
| Proceeds from asset sales | — | (1,509) | 34,091 | 249,906 | 208,585 | |
| Net cash used in investing activities | (1,071,526) | (663,546) | (820,696) | (3,362,953) | (3,006,738) | |
| Cash flows from financing activities: | ||||||
| Proceeds from employee equity awards | — | 37,667 | — | 81,543 | 77,628 | |
| Payment of dividend distributions | (287,573) | (291,169) | (259,455) | (1,151,459) | (1,042,909) | |
| Proceeds from public offering of common stock, net of offering costs | — | 796,018 | 398,271 | 796,018 | 497,870 | |
| Proceeds from mortgage and loans payable | — | — | — | 676,850 | — | |
| Proceeds from senior notes, net of debt discounts | — | — | — | 1,193,688 | 3,878,662 | |
| Repayment of finance lease liabilities | (36,394) | (28,252) | (35,410) | (134,202) | (165,539) | |
| Repayment of mortgage and loans payable | (1,714) | (25,195) | (10,584) | (587,941) | (717,010) | |
| Repayment of senior notes | — | — | — | — | (1,990,650) | |
| Debt extinguishment costs | — | — | — | — | (99,185) | |
| Debt issuance costs | — | — | — | (17,731) | (25,102) | |
| Net cash provided by (used in) financing activities | (325,681) | 489,069 | 92,822 | 856,766 | 413,765 | |
| Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | 37,398 | (39,063) | (6,335) | (98,201) | (30,474) | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | (599,620) | 606,749 | 157,896 | 358,794 | (76,241) | |
| Cash, cash equivalents and restricted cash at beginning of period | 2,507,868 | 1,901,119 | 1,391,558 | 1,549,454 | 1,625,695 | |
| Cash, cash equivalents and restricted cash at end of period | $ 1,908,248 | $ 2,507,868 | $ 1,549,454 | $ 1,908,248 | $ 1,549,454 | |
| Supplemental cash flow information: | ||||||
| Cash paid for taxes | $ 44,091 | $ 22,462 | $ 16,019 | $ 140,312 | $ 134,411 | |
| Cash paid for interest | $ 128,511 | $ 91,406 | $ 110,282 | $ 430,217 | $ 426,439 | |
| Free cash flow (negative free cash flow)^(1)^ | $ (276,115) | $ 179,141 | $ 101,803 | $ (277,202) | $ (356,056) | |
| Adjusted free cash flow ^(2)^ | $ (67,738) | $ 266,051 | $ 108,791 | $ 935,084 | $ 4,279 | |
| (1) | We define free cash flow (negative 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 | $ 760,189 | $ 820,289 | $ 892,105 | $ 2,963,182 | $ 2,547,206 | |
| Net cash used in investing activities as presented above | (1,071,526) | (663,546) | (820,696) | (3,362,953) | (3,006,738) | |
| Purchases, sales and maturities of investments, net | 35,222 | 22,398 | 30,394 | 122,569 | 103,476 | |
| Free cash flow (negative free cash flow) | $ (276,115) | $ 179,141 | $ 101,803 | $ (277,202) | $ (356,056) | |
| (2) | We define adjusted free cash flow as free cash flow (negative free cash flow) as defined above, excluding any real estate and business acquisitions, net of cash and restricted cash acquired as presented below: | |||||
| Free cash flow (negative free cash flow) as defined above | $ (276,115) | $ 179,141 | $ 101,803 | $ (277,202) | $ (356,056) | |
| Less business acquisitions, net of cash and restricted cash acquired | — | 80,342 | — | 964,010 | 158,498 | |
| Less real estate acquisitions | 208,377 | 6,568 | 6,988 | 248,276 | 201,837 | |
| Adjusted free cash flow | $ (67,738) | $ 266,051 | $ 108,791 | $ 935,084 | $ 4,279 | |
| EQUINIX, INC. | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Non-GAAP Measures and Other Supplemental Data | ||||||
| (in thousands) | ||||||
| (unaudited) | ||||||
| Three Months Ended | Twelve Months Ended | |||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||
| Recurring revenues | $ 1,773,380 | $ 1,748,132 | $ 1,603,474 | $ 6,871,287 | $ 6,220,485 | |
| Non-recurring revenues | 97,465 | 92,527 | 102,904 | 391,818 | 415,052 | |
| Revenues ^(1)^ | 1,870,845 | 1,840,659 | 1,706,378 | 7,263,105 | 6,635,537 | |
| Cash cost of revenues ^(2)^ | 642,176 | 610,827 | 577,991 | 2,436,074 | 2,197,496 | |
| Cash gross profit ^(3)^ | 1,228,669 | 1,229,832 | 1,128,387 | 4,827,031 | 4,438,041 | |
| Cash operating expenses ^(4)(7)^: | ||||||
| Cash sales and marketing expenses ^(5)^ | 140,697 | 120,467 | 121,637 | 506,609 | 464,084 | |
| Cash general and administrative<br><br>expenses ^(6)^ | 249,232 | 238,449 | 219,173 | 950,722 | 829,573 | |
| Total cash operating expenses ^(4)(7)^ | 389,929 | 358,916 | 340,810 | 1,457,331 | 1,293,657 | |
| Adjusted EBITDA ^(8)^ | $ 838,740 | $ 870,916 | $ 787,577 | $ 3,369,700 | $ 3,144,384 | |
| Cash gross margins ^(9)^ | 66 % | 67 % | 66 % | 66 % | 67 % | |
| Adjusted EBITDA<br><br>margins ^(10)^ | 45 % | 47 % | 46 % | 46 % | 47 % | |
| Adjusted EBITDA flow-through rate ^(11)^ | (107) % | 45 % | 4 % | 36 % | 46 % | |
| FFO ^(12)^ | $ 406,945 | $ 488,396 | $ 406,880 | $ 1,826,334 | $ 1,572,997 | |
| AFFO ^(13) (14)^ | $ 657,818 | $ 712,036 | $ 564,194 | $ 2,713,878 | $ 2,451,229 | |
| Basic FFO per share ^(15)^ | $ 4.40 | $ 5.31 | $ 4.51 | $ 19.94 | $ 17.52 | |
| Diluted FFO per share ^(15)^ | $ 4.39 | $ 5.30 | $ 4.48 | $ 19.89 | $ 17.40 | |
| Basic AFFO per share ^(15)^ | $ 7.11 | $ 7.75 | $ 6.25 | $ 29.64 | $ 27.31 | |
| Diluted AFFO per share^(15)^ | $ 7.09 | $ 7.73 | $ 6.22 | $ 29.55 | $ 27.11 | |
| (1) | The geographic split of our revenues on a services basis is presented below: | |||||
| Americas Revenues: | ||||||
| Colocation | $ 568,240 | $ 555,352 | $ 512,424 | $ 2,187,751 | $ 2,002,253 | |
| Interconnection | 197,337 | 190,283 | 177,661 | 756,214 | 678,677 | |
| Managed infrastructure | 59,244 | 54,704 | 46,045 | 218,499 | 168,577 | |
| Other | 4,885 | 5,127 | 5,184 | 20,727 | 12,430 | |
| Recurring revenues | 829,706 | 805,466 | 741,314 | 3,183,191 | 2,861,937 | |
| Non-recurring revenues | 42,065 | 40,695 | 40,801 | 166,026 | 159,814 | |
| Revenues | $ 871,771 | $ 846,161 | $ 782,115 | $ 3,349,217 | $ 3,021,751 | |
| EMEA Revenues: | ||||||
| Colocation | $ 450,480 | $ 445,733 | $ 410,457 | $ 1,744,121 | $ 1,597,830 | |
| Interconnection | 66,710 | 66,703 | 66,821 | 268,398 | 259,538 | |
| Managed infrastructure | 29,431 | 28,493 | 30,205 | 119,361 | 124,937 | |
| Other | 23,882 | 23,105 | 5,259 | 75,449 | 19,626 | |
| Recurring revenues | 570,503 | 564,034 | 512,742 | 2,207,329 | 2,001,931 | |
| Non-recurring revenues | 31,208 | 27,778 | 40,601 | 135,875 | 153,285 | |
| Revenues | $ 601,711 | $ 591,812 | $ 553,343 | $ 2,343,204 | $ 2,155,216 | |
| Asia-Pacific Revenues: | ||||||
| Colocation | $ 291,480 | $ 295,008 | $ 268,908 | $ 1,150,738 | $ 1,042,131 | |
| Interconnection | 61,572 | 61,264 | 58,418 | 243,664 | 223,287 | |
| Managed infrastructure | 17,819 | 19,269 | 20,928 | 77,646 | 87,343 | |
| Other | 2,300 | 3,091 | 1,164 | 8,719 | 3,856 | |
| Recurring revenues | 373,171 | 378,632 | 349,418 | 1,480,767 | 1,356,617 | |
| Non-recurring revenues | 24,192 | 24,054 | 21,502 | 89,917 | 101,953 | |
| Revenues | $ 397,363 | $ 402,686 | $ 370,920 | $ 1,570,684 | $ 1,458,570 | |
| Worldwide Revenues: | ||||||
| Colocation | $ 1,310,200 | $ 1,296,093 | $ 1,191,789 | $ 5,082,610 | $ 4,642,214 | |
| Interconnection | 325,619 | 318,250 | 302,900 | 1,268,276 | 1,161,502 | |
| Managed infrastructure | 106,494 | 102,466 | 97,178 | 415,506 | 380,857 | |
| Other | 31,067 | 31,323 | 11,607 | 104,895 | 35,912 | |
| Recurring revenues | 1,773,380 | 1,748,132 | 1,603,474 | 6,871,287 | 6,220,485 | |
| Non-recurring revenues | 97,465 | 92,527 | 102,904 | 391,818 | 415,052 | |
| Revenues | $ 1,870,845 | $ 1,840,659 | $ 1,706,378 | $ 7,263,105 | $ 6,635,537 | |
| (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 | $ 970,700 | $ 934,669 | $ 910,435 | $ 3,751,501 | $ 3,472,422 | |
| Depreciation, amortization and accretion expense | (316,549) | (313,110) | (322,194) | (1,270,399) | (1,236,488) | |
| Stock-based compensation expense | (11,975) | (10,732) | (10,250) | (45,028) | (38,438) | |
| Cash cost of revenues | $ 642,176 | $ 610,827 | $ 577,991 | $ 2,436,074 | $ 2,197,496 | |
| The geographic split of our cash cost of revenues is presented below: | ||||||
| Americas cash cost of revenues | $ 263,374 | $ 247,976 | $ 244,245 | $ 994,389 | $ 911,556 | |
| EMEA cash cost of revenues | 226,574 | 220,887 | 208,569 | 866,292 | 808,587 | |
| Asia-Pacific cash cost of revenues | 152,228 | 141,964 | 125,177 | 575,393 | 477,353 | |
| Cash cost of revenues | $ 642,176 | $ 610,827 | $ 577,991 | $ 2,436,074 | $ 2,197,496 | |
| (3) | We define cash gross profit as revenues less cash cost of revenues (as defined above). | |||||
| (4) | We define cash operating expense as selling, general, and administrative expense less depreciation, amortization, and stock-based compensation. We also refer to cash operating expense as cash selling, general and administrative expense or "cash SG&A". | |||||
| Selling, general, and administrative expense | $ 607,416 | $ 568,572 | $ 533,509 | $ 2,285,261 | $ 2,043,029 | |
| Depreciation and amortization expense | (121,943) | (118,558) | (106,570) | (468,975) | (424,036) | |
| Stock-based compensation expense | (95,544) | (91,098) | (86,129) | (358,955) | (325,336) | |
| Cash operating expense | $ 389,929 | $ 358,916 | $ 340,810 | $ 1,457,331 | $ 1,293,657 | |
| (5) | We define cash sales and marketing expense as sales and marketing expense less depreciation, amortization and stock-based compensation as presented below: | |||||
| Sales and marketing expense | $ 207,233 | $ 193,089 | $ 189,798 | $ 786,560 | $ 741,232 | |
| Depreciation and amortization expense | (49,604) | (50,115) | (48,064) | (197,157) | (198,004) | |
| Stock-based compensation expense | (16,932) | (22,507) | (20,097) | (82,794) | (79,144) | |
| Cash sales and marketing expense | $ 140,697 | $ 120,467 | $ 121,637 | $ 506,609 | $ 464,084 | |
| (6) | We define cash general and administrative expense as general and administrative expense less depreciation, amortization and stock-based compensation as presented below: | |||||
| General and administrative expense | $ 400,183 | $ 375,483 | $ 343,711 | $ 1,498,701 | $ 1,301,797 | |
| Depreciation and amortization expense | (72,339) | (68,443) | (58,506) | (271,818) | (226,032) | |
| Stock-based compensation expense | (78,612) | (68,591) | (66,032) | (276,161) | (246,192) | |
| Cash general and administrative expense | $ 249,232 | $ 238,449 | $ 219,173 | $ 950,722 | $ 829,573 | |
| (7) | The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below: | |||||
| Americas cash SG&A | $ 214,560 | $ 203,026 | $ 203,594 | $ 833,053 | $ 783,735 | |
| EMEA cash SG&A | 104,648 | 87,639 | 85,083 | 367,410 | 313,296 | |
| Asia-Pacific cash SG&A | 70,721 | 68,251 | 52,133 | 256,868 | 196,626 | |
| Cash SG&A | $ 389,929 | $ 358,916 | $ 340,810 | $ 1,457,331 | $ 1,293,657 | |
| (8) | We define adjusted EBITDA as income from operations excluding depreciation, amortization, accretion, stock-based compensation, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales as presented below: | |||||
| Net income | $ 128,903 | $ 211,739 | $ 123,141 | $ 704,577 | $ 499,728 | |
| Income tax expense | 48,807 | 34,606 | 41,899 | 124,792 | 109,224 | |
| Interest income | (18,462) | (11,192) | (1,130) | (36,268) | (2,644) | |
| Interest expense | 94,200 | 91,346 | 80,227 | 356,337 | 336,082 | |
| Other expense | 28,895 | 6,735 | 5,802 | 51,417 | 50,647 | |
| (Gain) loss on debt extinguishment | (143) | (75) | (214) | (327) | 115,125 | |
| Depreciation, amortization and accretion expense | 438,492 | 431,668 | 428,764 | 1,739,374 | 1,660,524 | |
| Stock-based compensation expense | 107,519 | 101,830 | 96,379 | 403,983 | 363,774 | |
| Transaction costs | 10,529 | 2,007 | 9,405 | 21,839 | 22,769 | |
| (Gain) loss on asset sales | — | 2,252 | 3,304 | 3,976 | (10,845) | |
| Adjusted EBITDA | $ 838,740 | $ 870,916 | $ 787,577 | $ 3,369,700 | $ 3,144,384 | |
| The geographic split of our adjusted EBITDA is presented below: | ||||||
| Americas net income (loss) | $ (67,580) | $ 48,369 | $ 73,523 | $ (584) | $ (189,187) | |
| Americas income tax expense (benefit) | (33,279) | 34,606 | (65,413) | 42,587 | 1,535 | |
| Americas interest income | (16,259) | (10,374) | (912) | (32,265) | (1,993) | |
| Americas interest expense | 83,363 | 80,681 | 70,973 | 316,934 | 298,376 | |
| Americas other expense (income) | 104,539 | (68,241) | (48,621) | (42,895) | (59,019) | |
| Americas loss on debt extinguishment | — | 39 | — | 198 | 115,668 | |
| Americas depreciation, amortization and accretion expense | 237,919 | 234,788 | 221,814 | 932,892 | 866,039 | |
| Americas stock-based compensation expense | 76,131 | 69,272 | 71,652 | 282,997 | 270,391 | |
| Americas transaction costs | 9,003 | 3,241 | 6,372 | 17,950 | 17,328 | |
| Americas loss on asset sales | — | 2,778 | 4,888 | 3,961 | 7,322 | |
| Americas adjusted EBITDA | $ 393,837 | $ 395,159 | $ 334,276 | $ 1,521,775 | $ 1,326,460 | |
| EMEA net income | $ 195,224 | $ 82,558 | $ 35,116 | $ 477,808 | $ 385,086 | |
| EMEA income tax expense | 16,531 | — | 68,786 | 16,650 | 69,162 | |
| EMEA interest income | (1,251) | (487) | (100) | (2,530) | (166) | |
| EMEA interest expense | 2,675 | 2,219 | 1,059 | 5,698 | 4,891 | |
| EMEA other expense (income) | (77,880) | 69,245 | 21,660 | 77,705 | 71,915 | |
| EMEA depreciation, amortization and accretion expense | 116,097 | 112,065 | 116,813 | 459,098 | 458,754 | |
| EMEA stock-based compensation expense | 18,840 | 19,174 | 15,312 | 73,294 | 57,578 | |
| EMEA transaction costs | 253 | (1,488) | 2,629 | 2,016 | 4,280 | |
| EMEA gain on asset sales | — | — | (1,584) | (237) | (18,167) | |
| EMEA adjusted EBITDA | $ 270,489 | $ 283,286 | $ 259,691 | $ 1,109,502 | $ 1,033,333 | |
| Asia-Pacific net income | $ 1,259 | $ 80,812 | $ 14,502 | $ 227,353 | $ 303,829 | |
| Asia-Pacific income tax expense | 65,555 | — | 38,526 | 65,555 | 38,527 | |
| Asia-Pacific interest income | (952) | (331) | (118) | (1,473) | (485) | |
| Asia-Pacific interest expense | 8,162 | 8,446 | 8,195 | 33,705 | 32,815 | |
| Asia-Pacific other expense | 2,236 | 5,731 | 32,763 | 16,607 | 37,751 | |
| Asia-Pacific gain on debt extinguishment | (143) | (114) | (214) | (525) | (543) | |
| Asia-Pacific depreciation, amortization and accretion expense | 84,476 | 84,815 | 90,137 | 347,384 | 335,731 | |
| Asia-Pacific stock-based compensation expense | 12,548 | 13,384 | 9,415 | 47,692 | 35,805 | |
| Asia-Pacific transaction costs | 1,273 | 254 | 404 | 1,873 | 1,161 | |
| Asia-Pacific (gain) loss on asset sales | — | (526) | — | 252 | — | |
| Asia-Pacific adjusted EBITDA | $ 174,414 | $ 192,471 | $ 193,610 | $ 738,423 | $ 784,591 | |
| (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 | 70 % | 71 % | 69 % | 70 % | 70 % | |
| EMEA cash gross margins | 62 % | 63 % | 62 % | 63 % | 62 % | |
| Asia-Pacific cash gross margins | 62 % | 65 % | 66 % | 63 % | 67 % | |
| (10) | We define adjusted EBITDA margins as adjusted EBITDA divided by revenues. | |||||
| Americas adjusted EBITDA margins | 45 % | 47 % | 43 % | 45 % | 44 % | |
| EMEA adjusted EBITDA margins | 45 % | 48 % | 47 % | 47 % | 48 % | |
| Asia-Pacific adjusted EBITDA margins | 44 % | 48 % | 52 % | 47 % | 54 % | |
| (11) | We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as follows: | |||||
| Adjusted EBITDA - current period | $ 838,740 | $ 870,916 | $ 787,577 | $ 3,369,700 | $ 3,144,384 | |
| Less adjusted EBITDA - prior period | (870,916) | (860,332) | (786,298) | (3,144,384) | (2,852,898) | |
| Adjusted EBITDA growth | $ (32,176) | $ 10,584 | $ 1,279 | $ 225,316 | $ 291,486 | |
| Revenues - current period | $ 1,870,845 | $ 1,840,659 | $ 1,706,378 | $ 7,263,105 | $ 6,635,537 | |
| Less revenues - prior period | (1,840,659) | (1,817,154) | (1,675,176) | (6,635,537) | (5,998,545) | |
| Revenue growth | $ 30,186 | $ 23,505 | $ 31,202 | $ 627,568 | $ 636,992 | |
| Adjusted EBITDA flow-through rate | (107) % | 45 % | 4 % | 36 % | 46 % | |
| (12) | FFO is defined as net income or loss, excluding gain or loss 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 | $ 128,903 | $ 211,739 | $ 123,141 | $ 704,577 | $ 499,728 | |
| Net (income) loss attributable to non-controlling interests | (140) | 68 | 133 | (232) | 463 | |
| Net income attributable to Equinix | 128,763 | 211,807 | 123,274 | 704,345 | 500,191 | |
| Adjustments: | ||||||
| Real estate depreciation | 274,625 | 271,920 | 277,031 | 1,104,787 | 1,073,148 | |
| (Gain) loss on disposition of real estate property | 437 | 2,002 | 4,693 | 7,134 | (6,439) | |
| Adjustments for FFO from unconsolidated joint ventures | 3,120 | 2,667 | 1,882 | 10,068 | 6,097 | |
| FFO attributable to common shareholders | $ 406,945 | $ 488,396 | $ 406,880 | $ 1,826,334 | $ 1,572,997 | |
| (13) | AFFO is defined as FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, stock-based charitable contributions, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, gain or loss on debt extinguishment, an income tax expense adjustment, net income or loss from discontinued 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 attributable to common shareholders | $ 406,945 | $ 488,396 | $ 406,880 | $ 1,826,334 | $ 1,572,997 | |
| Adjustments: | ||||||
| Installation revenue adjustment | 6,975 | 9,959 | 5,767 | 17,745 | 27,928 | |
| Straight-line rent expense adjustment | 1,585 | 6,811 | (1,920) | 16,263 | 9,677 | |
| Amortization of deferred financing costs and debt discounts and premiums | 4,553 | 4,533 | 4,375 | 17,826 | 17,135 | |
| Contract cost adjustment | (17,380) | (12,678) | (19,753) | (52,888) | (63,064) | |
| Stock-based compensation expense | 107,519 | 101,830 | 96,379 | 403,983 | 363,774 | |
| Stock-based charitable contributions | 34,974 | — | — | 49,013 | — | |
| Non-real estate depreciation expense | 111,342 | 106,400 | 99,014 | 426,666 | 377,658 | |
| Amortization expense | 51,438 | 51,873 | 50,056 | 204,755 | 205,484 | |
| Accretion expense | 1,086 | 1,476 | 2,663 | 3,166 | 4,234 | |
| Recurring capital expenditures | (80,047) | (50,182) | (85,693) | (188,885) | (199,089) | |
| (Gain) loss on debt extinguishment | (143) | (75) | (214) | (327) | 115,125 | |
| Transaction costs | 10,529 | 2,007 | 9,405 | 21,839 | 22,769 | |
| Impairment charges ^(1)^ | — | 1,815 | (465) | 1,815 | 31,847 | |
| Income tax expense (benefit) adjustment ^(1)^ | 19,806 | (965) | (3,086) | (31,165) | (38,505) | |
| Adjustments for AFFO from unconsolidated joint ventures | (1,364) | 836 | 786 | (2,262) | 3,259 | |
| AFFO attributable to common shareholders | $ 657,818 | $ 712,036 | $ 564,194 | $ 2,713,878 | $ 2,451,229 | |
| ^(1)^Impairment charges relate to the impairment of an indemnification asset resulting from the settlement of a pre-acquisition uncertain tax position, which was recorded as Other Income (Expense) on the Condensed Consolidated Statements of Operations. This impairment charge was offset by the recognition of tax benefits in the same amount, which was included within the Income tax expense adjustment line on the table above. | ||||||
| (14) | Following is how we reconcile from adjusted EBITDA to AFFO: | |||||
| Adjusted EBITDA | $ 838,740 | $ 870,916 | $ 787,577 | $ 3,369,700 | $ 3,144,384 | |
| Adjustments: | ||||||
| Interest expense, net of interest income | (75,738) | (80,154) | (79,097) | (320,069) | (333,438) | |
| Amortization of deferred financing costs and debt discounts and premiums | 4,553 | 4,533 | 4,375 | 17,826 | 17,135 | |
| Income tax expense | (48,807) | (34,606) | (41,899) | (124,792) | (109,224) | |
| Income tax expense (benefit) adjustment ^(1)^ | 19,806 | (965) | (3,086) | (31,165) | (38,505) | |
| Straight-line rent expense adjustment | 1,585 | 6,811 | (1,920) | 16,263 | 9,677 | |
| Stock-based charitable contributions | 34,974 | — | — | 49,013 | — | |
| Contract cost adjustment | (17,380) | (12,678) | (19,753) | (52,888) | (63,064) | |
| Installation revenue adjustment | 6,975 | 9,959 | 5,767 | 17,745 | 27,928 | |
| Recurring capital expenditures | (80,047) | (50,182) | (85,693) | (188,885) | (199,089) | |
| Other expense | (28,895) | (6,735) | (5,802) | (51,417) | (50,647) | |
| (Gain) loss on disposition of real estate property | 437 | 2,002 | 4,693 | 7,134 | (6,439) | |
| Adjustments for unconsolidated JVs' and non-controlling interests | 1,615 | 3,572 | 2,801 | 7,574 | 9,819 | |
| Adjustments for impairment charges ^(1)^ | — | 1,815 | (465) | 1,815 | 31,847 | |
| Adjustment for gain (loss) on sale of asset | — | (2,252) | (3,304) | (3,976) | 10,845 | |
| AFFO attributable to common shareholders | $ 657,818 | $ 712,036 | $ 564,194 | $ 2,713,878 | $ 2,451,229 | |
| ^(1)^Impairment charges relate to the impairment of an indemnification asset resulting from the settlement of a pre-acquisition uncertain tax position, which was recorded as Other Income (Expense) on the Condensed Consolidated Statements of Operations. This impairment charge was offset by the recognition of tax benefits in the same amount, which was included within the Income tax expense adjustment line on the table above. | ||||||
| (15) | The shares used in the computation of basic and diluted FFO and AFFO per share attributable to Equinix is presented below: | |||||
| Shares used in computing basic net income per share, FFO per share and AFFO per share | 92,573 | 91,896 | 90,240 | 91,569 | 89,772 | |
| Effect of dilutive securities: | ||||||
| Employee equity awards | 179 | 239 | 512 | 259 | 637 | |
| Shares used in computing diluted net income per share, FFO per share and AFFO per share | 92,752 | 92,135 | 90,752 | 91,828 | 90,409 | |
| Basic FFO per share | $ 4.40 | $ 5.31 | $ 4.51 | $ 19.94 | $ 17.52 | |
| Diluted FFO per share | $ 4.39 | $ 5.30 | $ 4.48 | $ 19.89 | $ 17.40 | |
| Basic AFFO per share | $ 7.11 | $ 7.75 | $ 6.25 | $ 29.64 | $ 27.31 | |
| Diluted AFFO per share | $ 7.09 | $ 7.73 | $ 6.22 | $ 29.55 | $ 27.11 |
CONTACT: Equinix Investor Relations Contact: invest@equinix.com, Equinix Media Contact: press@equinix.com