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Press Release -- October 26th, 2011
Source: Equinix
Tags: Colocation, Construction, Equipment, Exchange, Expansion

Equinix Reports Third Quarter 2011 Results

  • Reported revenues of $417.6 million, a 6% increase over the previous quarter and a 26% increase over the same quarter last year
  • Reported adjusted EBITDA of $191.6 million, a 6% increase over the previous quarter and a 31% increase over the same quarter last year
  • Increased 2011 annual revenue guidance to greater than $1,600.0 million and increased 2011 adjusted EBITDA guidance to greater than $730.0 million
  • Announced initial guidance for 2012 including annual revenues to be greater than $1,870.0 million, adjusted EBITDA to be greater than $850.0 million and total capital expenditures to be in the range of $700.0 to 800.0 million

REDWOOD CITY, CA — October 26, 2011 — Equinix, Inc. (NASDAQ:EQIX, news, filings), a provider of global data center services, today reported quarterly results for the quarter ended September 30, 2011.  This quarter included the first full quarterly results from the acquisition of an indirect, controlling equity interest in ALOG Data Centers do Brasil S.A. from April 25, 2011, which is referred to as the ALOG acquisition.

Revenues were $417.6 million for the third quarter, a 6% increase over the previous quarter and a 26% increase over the same quarter last year.  This result included $17.9 million in revenues from ALOG for the quarter.  Recurring revenues, consisting primarily of colocation, interconnection and managed services were $397.4 million for the third quarter, a 6% increase over the previous quarter and a 26% increase over the same quarter last year.  Non-recurring revenues were $20.2 million in the quarter.

“Equinix achieved strong results in all three regions and we are on target to surpass our 2011 financial objectives,” said Steve Smith, president and CEO of Equinix. “We plan to make additional investments in Platform Equinix so that we may continue to deliver value to our customers around the globe.  Our goal is to generate over $3 billion in annual revenues in 2015, while creating significant returns for our shareholders from these investments.”

Cost of revenues were $228.2 million for the third quarter, a 6% increase over the previous quarter and a 23% increase over the same quarter last year.  Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $83.6 million, were $144.6 million for the third quarter, a 5% increase from the previous quarter and a 24% increase over 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 65%, unchanged from the previous quarter and the same quarter last year.

Selling, general and administrative expenses were $109.0 million for the third quarter, a 6% increase over the previous quarter and a 21% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $27.6 million, were $81.4 million for the third quarter, a 7% increase over the previous quarter and a 21% increase over the same quarter last year.

Interest expense was $51.1 million for the third quarter, a 36% increase from the previous quarter and a 33% increase over the same quarter last year, primarily attributed to the $750.0 million 7.00% senior notes offering in July 2011.  The Company recorded income tax expense of $5.3 million for the third quarter as compared to income tax expense of $8.1 million in the prior quarter and income tax expense of $4.6 million in the same quarter last year.

Net income attributable to Equinix for the third quarter was $20.3 million.  This represents a basic net income per share attributable to Equinix of $0.21 and a diluted net income per share attributable to Equinix of $0.20 based on a weighted average share count of 47.2 million and 47.9 million, respectively, for the third quarter of 2011.

Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges and acquisition costs for the third quarter, was $191.6 million, an increase of 6% over the previous quarter and a 31% 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 $131.5 million, of which $104.9 million was attributed to expansion capital expenditures and $26.6 million was attributed to ongoing capital expenditures.

The Company generated cash from operating activities of $141.9 million for the third quarter as compared to $140.3 million in the previous quarter and $113.3 million for the same quarter last year. Cash used in investing activities was $808.7 million in the third quarter as compared to cash used in investing activities of $209.7 million in the previous quarter and cash used in investing activities of $259.5 million for the same quarter last year. Cash provided by financing activities was $744.1 million for the third quarter, which was primarily related to the net proceeds from the  $750.0 million 7.00% senior notes offering, the proceeds from employee equity awards and draw downs of certain loans payable.

As of September 30, 2011, the Company’s cash, cash equivalents and investments were $1.2 billion, as compared to $423.1 million as of June 30, 2011.

Company Metrics and Q3 Results Presentation

  • A presentation to accompany Equinix’s Q3 Results conference call, as well as the Company’s Non-Financial Metrics tracking sheet, have been posted on the Investors section of Equinix’s web site atwww.equinix.com/investors

Business Outlook

For the full year of 2011, total revenues are expected to be greater than $1,600.0 million.  Total year cash gross margins are expected to range between 65% and 66%.  Cash selling, general and administrative expenses are expected to approximate $320.0 million.  Adjusted EBITDA for the year is expected to be greater than $730.0 million.  Capital expenditures for 2011 are expected to be in the range of $645.0 to $665.0 million, comprised of approximately $115.0 million of ongoing capital expenditures and $530.0 to $550.0 million for expansion capital expenditures.

For the full year of 2012, total revenues are expected to be greater than $1,870.0 million.  Adjusted EBITDA for the year is expected to be greater than $850.0 million.  Capital expenditures for 2012 are expected to be in the range of $700.0 to $800.0 million, comprised of approximately $120.0 million of ongoing capital expenditures and $580.0 to $680.0 million for expansion capital expenditures.

The Company will discuss its results and guidance on its quarterly conference call on Wednesday, October 26, 2011, at 5:30 p.m. ET (2:30 p.m. PT).  A presentation to accompany the call will be available on the Company’s website at www.equinix.com/investors.  To hear the conference call live, please dial 210-234-8004 (domestic and international) and reference the passcode (EQIX).  A simultaneous live Webcast of the call will also be available atwww.equinix.com/investors.

A replay of the call will be available beginning on Wednesday, October 26, 2011, at 7:30 p.m. (ET) through November 26, 2011, by dialing 203-369-1814 (domestic and international) and reference the passcode (2011).  In addition, the webcast will be available on the company's web site at www.equinix.com/investors over the same time period.  No password is required for the replay or the webcast.

About Equinix

Equinix, Inc. (NASDAQ: EQIX) connects businesses with partners and customers around the world through a global platform of high performance data centers, containing dynamic ecosystems and the broadest choice of networks. Platform Equinix connects more than 4,000 enterprises, cloud, digital content and financial companies including more than 680 network service providers to help them grow their businesses, improve application performance and protect their vital digital assets. Equinix operates in 38 strategic markets across the Americas, EMEA and Asia-Pacific and continually invests in expanding its platform to power customer growth.http://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 and adjusted 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 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 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 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 - GAAP PRESENTATION
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30,
2011
June 30,
2011
September 30,
2010
September 30,
2011
September 30,
2010
Recurring revenues $ 397,351 $ 376,528 $ 314,727 $ 1,117,788 $ 834,080
Non-recurring revenues 20,250 18,372 15,620 57,742 41,010
Revenues 417,601 394,900 330,347 1,175,530 875,090
Cost of revenues 228,153 215,572 185,476 638,301 481,108
Gross profit 189,448 179,328 144,871 537,229 393,982
Operating expenses:
Sales and marketing 43,070 37,063 31,205 113,769 79,586
General and administrative 65,976 65,681 58,640 194,258 155,961
Restructuring charges 1,587 103 1,886 2,186 6,243
Acquisition costs 699 1,615 1,114 2,729 11,957
Total operating expenses 111,332 104,462 92,845 312,942 253,747
Income from operations 78,116 74,866 52,026 224,287 140,235
Interest and other income (expense):
Interest income 679 632 310 1,526 1,307
Interest expense (51,114 ) (37,677 ) (38,363 ) (126,152 ) (101,653 )
Other-than-temporary impairment recovery on investments - - 206 - 3,626
Loss on debt extinguishment and interest rate swaps, net - - - - (4,831 )
Other income (expense) (1,694 ) 1,021 1,654 1,438 193
Total interest and other, net (52,129 ) (36,024 ) (36,193 ) (123,188 ) (101,358 )
Income before income taxes 25,987 38,842 15,833 101,099 38,877
Income tax expense (5,348 ) (8,109 ) (4,637 ) (24,582 ) (15,756 )
Net income 20,639 30,733 11,196 76,517 23,121
Net income attributable to redeemable non-controlling interests (320 ) (3 ) - (323 ) -
Net income attributable to Equinix $ 20,319 $ 30,730 $ 11,196 $ 76,194 $ 23,121
Net income per share attributable to Equinix:
Basic net income per share (1) $ 0.21 $ 0.65 $ 0.24 $ 1.40 $ 0.54
Diluted net income per share (1) $ 0.20 $ 0.64 $ 0.24 $ 1.37 $ 0.53
Shares used in computing basic net income per share 47,202 46,924 45,745 46,861 42,961
Shares used in computing diluted net income per share 47,943 50,664 46,676 47,694 44,040
(1)
The net income attributable to Equinix used in the computation of basic and diluted net income per share attributable to Equinix is presented below:
Net income $ 20,639 $ 30,733 $ 11,196 $ 76,517 $ 23,121
Adjustments attributable to redeemable non-controlling interests: (10,959 ) - - (10,962 ) -
Net income attributable to Equinix, basic 9,680 30,733 11,196 65,555 23,121
Interest on convertible debt - 1,746 - - -
Net income attributable to Equinix, diluted $ 9,680 $ 32,479 $ 11,196 $ 65,555 $ 23,121
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30,
2011
June 30,
2011
September 30,
2010
September 30,
2011
September 30,
2010
Recurring revenues $ 397,351 $ 376,528 $ 314,727 $ 1,117,788 $ 834,080
Non-recurring revenues 20,250 18,372 15,620 57,742 41,010
Revenues (1) 417,601 394,900 330,347 1,175,530 875,090
Cash cost of revenues (2) 144,560 137,558 116,602 404,749 305,578
Cash gross profit (3) 273,041 257,342 213,745 770,781 569,512
Cash operating expenses (4):
Cash sales and marketing expenses (5) 34,504 29,261 24,171 90,869 61,514
Cash general and administrative expenses (6) 46,909 46,753 43,113 139,680 112,110
Total cash operating expenses (7) 81,413 76,014 67,284 230,549 173,624
Adjusted EBITDA (8) $ 191,628 $ 181,328 $ 146,461 $ 540,232 $ 395,888
Cash gross margins (9) 65 % 65 % 65 % 66 % 65 %
Adjusted EBITDA margins (10) 46 % 46 % 44 % 46 % 45 %
Adjusted EBITDA flow-through rate (11) 45 % 44 % 42 % 55 % 41 %
(1)
The geographic split of our revenues on a services basis is presented below:
Americas Revenues:
Colocation $ 193,317 $ 187,840 $ 164,653 $ 557,353 432,154
Interconnection 49,432 48,164 42,102 143,518 100,938
Managed infrastructure 15,966 8,706 821 25,439 2,106
Rental 550 489 520 1,543 1,109
Recurring revenues 259,265 245,199 208,096 727,853 536,307
Non-recurring revenues 9,589 8,690 7,229 27,417 19,220
Revenues 268,854 253,889 215,325 755,270 555,527
EMEA Revenues:
Colocation 77,709 74,645 60,970 220,554 171,310
Interconnection 3,446 3,203 2,305 9,461 6,254
Managed infrastructure 3,691 3,481 2,734 10,370 8,238
Rental 262 177 270 557 586
Recurring revenues 85,108 81,506 66,279 240,942 186,388
Non-recurring revenues 7,216 7,105 6,515 22,032 16,654
Revenues 92,324 88,611 72,794 262,974 203,042
Asia-Pacific Revenues:
Colocation 41,874 39,101 31,672 117,314 87,510
Interconnection 6,378 5,818 4,430 17,537 11,819
Managed infrastructure 4,726 4,904 4,250 14,142 12,056
Recurring revenues 52,978 49,823 40,352 148,993 111,385
Non-recurring revenues 3,445 2,577 1,876 8,293 5,136
Revenues 56,423 52,400 42,228 157,286 116,521
Worldwide Revenues:
Colocation 312,900 301,586 257,295 895,221 690,974
Interconnection 59,256 57,185 48,837 170,516 119,011
Managed infrastructure 24,383 17,091 7,805 49,951 22,400
Rental 812 666 790 2,100 1,695
Recurring revenues 397,351 376,528 314,727 1,117,788 834,080
Non-recurring revenues 20,250 18,372 15,620 57,742 41,010
Revenues $ 417,601 $ 394,900 $ 330,347 $ 1,175,530 $ 875,090
(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 $ 228,153 $ 215,572 $ 185,476 $ 638,301 $ 481,108
Depreciation, amortization and accretion expense (82,020 ) (76,515 ) (67,255 ) (229,135 ) (170,573 )
Stock-based compensation expense (1,573 ) (1,499 ) (1,619 ) (4,417 ) (4,957 )
Cash cost of revenues $ 144,560 $ 137,558 $ 116,602 $ 404,749 $ 305,578
The geographic split of our cash cost of revenues is presented below:
Americas cash cost of revenues $ 86,503 $ 81,886 $ 71,879 $ 238,599 $ 177,247
EMEA cash cost of revenues 36,930 36,217 29,373 107,638 86,969
Asia-Pacific cash cost of revenues 21,127 19,455 15,350 58,512 41,362
Cash cost of revenues $ 144,560 $ 137,558 $ 116,602 $ 404,749 $ 305,578
(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, restructuring charges 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 $ 43,070 $ 37,063 $ 31,205 $ 113,769 $ 79,586
Depreciation and amortization expense (4,413 ) (4,192 ) (3,407 ) (12,271 ) (7,756 )
Stock-based compensation expense (4,153 ) (3,610 ) (3,627 ) (10,629 ) (10,316 )
Cash sales and marketing expenses $ 34,504 $ 29,261 $ 24,171 $ 90,869 $ 61,514
(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 $ 65,976 $ 65,681 $ 58,640 $ 194,258 $ 155,961
Depreciation and amortization expense (5,586 ) (5,719 ) (3,823 ) (16,564 ) (9,104 )
Stock-based compensation expense (13,481 ) (13,209 ) (11,704 ) (38,014 ) (34,747 )
Cash general and administrative expenses $ 46,909 $ 46,753 $ 43,113 $ 139,680 $ 112,110
(7)
Our cash operating expenses, or cash SG&A, as defined above, is presented below:
Cash sales and marketing expenses $ 34,504 $ 29,261 $ 24,171 $ 90,869 $ 61,514
Cash general and administrative expenses 46,909 46,753 43,113 139,680 112,110
Cash SG&A $ 81,413 $ 76,014 $ 67,284 $ 230,549 $ 173,624
The geographic split of our cash operating expenses, or cash SG&A, is presented below:
Americas cash SG&A $ 54,838 $ 49,499 $ 45,499 $ 153,149 $ 117,085
EMEA cash SG&A 17,427 17,545 14,365 51,908 38,122
Asia-Pacific cash SG&A 9,148 8,970 7,420 25,492 18,417
Cash SG&A $ 81,413 $ 76,014 $ 67,284 $ 230,549 $ 173,624
(8)
We define adjusted EBITDA as income from operations plus depreciation, amortization, accretion, stock-based compensation expense, restructuring charges and acquisition costs as presented below:
Income from operations $ 78,116 $ 74,866 $ 52,026 $ 224,287 $ 140,235
Depreciation, amortization and accretion expense 92,019 86,426 74,485 257,970 187,433
Stock-based compensation expense 19,207 18,318 16,950 53,060 50,020
Restructuring charges 1,587 103 1,886 2,186 6,243
Acquisition costs 699 1,615 1,114 2,729 11,957
Adjusted EBITDA $ 191,628 $ 181,328 $ 146,461 $ 540,232 $ 395,888
The geographic split of our adjusted EBITDA is presented below:
Americas income from operations $ 51,659 $ 49,072 $ 31,921 $ 148,050 $ 84,051
Americas depreciation, amortization and accretion expense 58,414 57,246 51,108 169,142 122,363
Americas stock-based compensation expense 15,176 14,527 12,683 41,545 37,346
Americas restructuring charges 1,587 103 1,886 2,186 6,243
Americas acquisition costs 677 1,556 349 2,599 11,192
Americas adjusted EBITDA 127,513 122,504 97,947 363,522 261,195
EMEA income from operations 16,305 14,178 10,258 41,954 26,251
EMEA depreciation, amortization and accretion expense 19,354 18,512 15,531 54,710 43,752
EMEA stock-based compensation expense 2,308 2,147 2,502 6,750 7,183
EMEA acquisition costs - 12 765 14 765
EMEA adjusted EBITDA 37,967 34,849 29,056 103,428 77,951
Asia-Pacific income from operations 10,152 11,616 9,847 34,283 29,933
Asia-Pacific depreciation, amortization and accretion expense 14,251 10,668 7,846 34,118 21,318
Asia-Pacific stock-based compensation expense 1,723 1,644 1,765 4,765 5,491
Asia-Pacific acquisition costs 22 47 - 116 -
Asia-Pacific adjusted EBITDA 26,148 23,975 19,458 73,282 56,742
Adjusted EBITDA $ 191,628 $ 181,328 $ 146,461 $ 540,232 $ 395,888
(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 68 % 68 % 67 % 68 % 68 %
EMEA cash gross margins 60 % 59 % 60 % 59 % 57 %
Asia-Pacific cash gross margins 63 % 63 % 64 % 63 % 65 %
(10)
We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA margins 47 % 48 % 45 % 48 % 47 %
EMEA adjusted EBITDA margins 41 % 39 % 40 % 39 % 38 %
Asia-Pacific adjusted EBITDA margins 46 % 46 % 46 % 47 % 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 $ 191,628 $ 181,328 $ 146,461 $ 540,232 $ 395,888
Less adjusted EBITDA - prior period (181,328 ) (167,276 ) (132,155 ) (427,563 ) (317,230 )
Adjusted EBITDA growth $ 10,300 $ 14,052 $ 14,306 $ 112,669 $ 78,658
Revenues - current period $ 417,601 $ 394,900 $ 330,347 $ 1,175,530 $ 875,090
Less revenues - prior period (394,900 ) (363,029 ) (296,094 ) (971,685 ) (683,278 )
Revenue growth $ 22,701 $ 31,871 $ 34,253 $ 203,845 $ 191,812
Adjusted EBITDA flow-through rate 45 % 44 % 42 % 55 % 41 %
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets
September 30,
2011
December 31,
2010
Cash and cash equivalents $ 370,523 $ 442,841
Short-term investments 700,246 147,192
Accounts receivable, net 144,185 116,358
Other current assets 115,344 71,657
Total current assets 1,330,298 778,048
Long-term investments 99,419 2,806
Property, plant and equipment, net 3,122,094 2,650,953
Goodwill 867,280 774,365
Intangible assets, net 153,505 150,945
Other assets 158,091 90,892
Total assets $ 5,730,687 $ 4,448,009
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 181,093 $ 145,854
Accrued property and equipment 90,181 91,667
Current portion of capital lease and other financing obligations 11,367 7,988
Current portion of loans payable 74,652 19,978
Current portion of convertible debt 243,176 -
Other current liabilities 55,687 52,628
Total current liabilities 656,156 318,115
Capital lease and other financing obligations, less current portion 376,848 253,945
Loans payable, less current portion 161,984 100,337
Senior notes 1,500,000 750,000
Convertible debt 691,520 916,337
Other liabilities 253,300 228,760
Total liabilities 3,639,808 2,567,494
Redeemable non-controlling interests 66,372 -
Common stock 47 46
Additional paid-in capital 2,417,781 2,341,586
Accumulated other comprehensive loss (120,416 ) (112,018 )
Accumulated deficit (272,905 ) (349,099 )
Total stockholders' equity 2,024,507 1,880,515
Total liabilities, redeemable non-controlling interests
and stockholders' equity $ 5,730,687 $ 4,448,009
Ending headcount by geographic region is as follows:
Americas headcount 1,750 1,156
EMEA headcount 552 482
Asia-Pacific headcount 371 283
Total headcount 2,673 1,921
EQUINIX, INC.
SUMMARY OF DEBT OUTSTANDING
(in thousands)
(unaudited)
September 30,
2011
December 31,
2010
Capital lease and other financing obligations $ 388,215 $ 261,933
Paris IBX financing 40,054 -
ALOG financing 11,738 -
New Asia-Pacific financing 184,844 120,315
Total loans payable 236,636 120,315
Senior notes 1,500,000 750,000
Convertible debt, net of debt discount 934,696 916,337
Plus debt discount 85,040 103,399
Total convertible debt principal 1,019,736 1,019,736
Total debt outstanding $ 3,144,587 $ 2,151,984
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30,
2011
June 30,
2011
September 30,
2010
September 30,
2011
September 30,
2010
Cash flows from operating activities:
Net income $ 20,639 $ 30,733 $ 11,196 $ 76,517 $ 23,121
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion 92,019 86,426 74,485 257,970 187,433
Stock-based compensation 19,207 18,318 16,950 53,060 50,020
Debt issuance costs and debt discount 8,207 8,325 7,160 23,816 19,403
Loss on debt extinguishment and interest rate swaps - - - - 4,831
Restructuring charges 1,587 103 1,886 2,186 6,243
Other reconciling items 711 3,074 894 5,348 2,162
Changes in operating assets and liabilities:
Accounts receivable (9,989 ) (19,409 ) (6,729 ) (26,299 ) (38,486 )
Deferred tax assets, net 1,760 (2,507 ) 3,442 4,893 7,721
Accounts payable and accrued expenses 32 4,082 (3,013 ) (9,492 ) 16,047
Other assets and liabilities 7,697 11,203 6,992 11,989 (8,514 )
Net cash provided by operating activities 141,870 140,348 113,263 399,988 269,981
Cash flows from investing activities:
Purchases, sales and maturities of investments, net (677,229 ) 30,979 (115,554 ) (648,435 ) (68,256 )
Purchase of ALOG, less cash acquired - (41,954 ) - (41,954 ) -
Purchase of Switch and Data, less cash acquired - - - - (113,289 )
Purchase of Frankfurt IBX property - (9,042 ) - (9,042 ) -
Purchase of Paris IBX property - - - (14,951 ) -
Purchases of other property and equipment (131,525 ) (188,875 ) (143,941 ) (495,515 ) (436,046 )
Other investing activities 61 (845 ) - (94,922 ) (916 )
Net cash used in investing activities (808,693 ) (209,737 ) (259,495 ) (1,304,819 ) (618,507 )
Cash flows from financing activities:
Proceeds from employee equity awards 11,107 8,929 14,026 35,704 36,179
Proceeds from loans payable 12,718 55,264 16,853 90,635 115,811
Proceeds from senior notes 750,000 - - 750,000 750,000
Repayment of capital lease and other financing obligations (3,081 ) (2,355 ) (1,713 ) (7,404 ) (14,114 )
Repayment of mortgage and loans payable (11,171 ) - (11,049 ) (21,273 ) (469,077 )
Debt issuance costs (15,426 ) - (5 ) (15,551 ) (23,124 )
Net cash provided by financing activities 744,147 61,838 18,112 832,111 395,675
Effect of foreign currency exchange rates on cash and cash equivalents (4,673 ) 957 5,927 402 (4,056 )
Net increase (decrease) in cash and cash equivalents 72,651 (6,594 ) (122,193 ) (72,318 ) 43,093
Cash and cash equivalents at beginning of period 297,872 304,466 511,342 442,841 346,056
Cash and cash equivalents at end of period $ 370,523 $ 297,872 $ 389,149 $ 370,523 $ 389,149
Free cash flow (1) $ 10,406 $ (100,368 ) $ (30,678 ) $ (256,396 ) $ (280,270 )
Adjusted free cash flow (2) $ 10,406 $ (49,372 ) $ (30,678 ) $ (190,449 ) $ (166,981 )
(1)
We define free cash flow as net cash provided by operating activities plus net cash 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 $ 141,870 $ 140,348 $ 113,263 $ 399,988 $ 269,981
Net cash used in investing activities as presented above (808,693 ) (209,737 ) (259,495 ) (1,304,819 ) (618,507 )
Purchases, sales and maturities of investments, net 677,229 (30,979 ) 115,554 648,435 68,256
Free cash flow (negative free cash flow) $ 10,406 $ (100,368 ) $ (30,678 ) $ (256,396 ) $ (280,270 )
(2)
We define adjusted free cash flow as free cash flow (as defined above) excluding any purchases or sales of real estate and acquisitions as presented below:
Free cash flow (as defined above) $ 10,406 $ (100,368 ) $ (30,678 ) $ (256,396 ) $ (280,270 )
Less purchase of ALOG, less cash acquired - 41,954 - 41,954 -
Less purchase of Switch and Data, less cash acquired - - - - 113,289
Less purchase of Frankfurt IBX property - 9,042 - 9,042 -
Less purchase of Paris IBX property - - - 14,951 -
Adjusted free cash flow (negative adjusted free cash flow) $ 10,406 $ (49,372 ) $ (30,678 ) $ (190,449 ) $ (166,981 )

Contact:

Equinix Investor Relations Contacts:
Equinix, Inc.
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krymill@equinix.com
Jason Starr, 650-598-6020
jstarr@equinix.com
or
Equinix Media Contact:
LEWIS PR
Scott Blevins, 415-992-4400
equinixlewisus@lewispr.com

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