EQUINIX, INC. REDWOOD CITY, Calif., Feb. 15, 2017 /PRNewswire/ --
-- Record quarterly bookings with particular strength in the enterprise
vertical
-- Added seven Fortune 500 customers and 11 Forbes Global 2000 customers
-- Customer deployments across multiple metros represent 82% of total
recurring revenue, demonstrating the strength of Equinix's global
platform
-- Company announces $175 million in new expansions in Amsterdam, Chicago,
Dubai, Rio de Janeiro and Toronto
Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today reported quarterly and annual results for the quarter and the year ended December 31, 2016. 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.
2016 Results Summary
-- Revenues from continuing operations
-- $3,612 million, a 33% increase over the previous year; an organic
and constant currency growth rate of greater than 14%
-- Includes $400 million of revenues from Telecity
-- Includes $149 million of revenues from Bit-isle
-- Operating Income
-- $619 million, a 9% increase over the previous year
-- Adjusted EBITDA
-- $1,657 million, a 46% adjusted EBITDA margin
-- Includes $187 million of adjusted EBITDA from Telecity
-- Includes $50 million of adjusted EBITDA from Bit-isle
-- Includes $58 million of integration costs for acquisitions
-- Net Income from Continuing Operations
-- $114 million
-- AFFO
-- $1,078 million, a 30% increase from the previous year
-- Assumes $58 million of integration costs for acquisitions
2017 Annual Guidance Summary
-- Revenues from continuing operations
-- >$3,933 million, a 9% increase over the previous year; a normalized
and constant currency growth rate of greater than 11%
-- Adjusted EBITDA
-- >$1,842 million or a 47% adjusted EBITDA margin
-- Assumes $30 million of integration costs for acquisitions
-- AFFO
-- >$1,249 million, a 16% increase over the previous year
-- Assumes $30 million of integration costs for acquisitions
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.
Quote
Steve Smith, President and CEO, Equinix:
"2016 was a pivotal year for Equinix. We continued to capture the shift to the cloud, expand our global reach and scale, grow interconnection, and deliver record bookings and increasing shareholder returns. We are operating at the intersection of some of the greatest technology trends in our lifetime, and the digital transformation driven by cloud services is shifting compute, storage and networking to the edge, which plays into our dense ecosystems and global scale. We look forward to a busy 2017 as we integrate our acquisitions, grow our global platform, enhance our portfolio of services and increase our reach and relevance to the cloud-enabled enterprise."
Business Highlights
-- Equinix continues to invest and expand the reach of its global platform
with $1.1 billion in capital expenditures in 2016 and 19 announced
expansion projects currently underway. Today Equinix announced new
expansions in Amsterdam, Chicago, Dubai, Rio de Janeiro and Toronto
totaling more than $175 million of capital expenditures. The global
reach of Equinix continues to attract companies seeking to locate their
infrastructure closer to the digital edge, and in Q4 2016, customer
deployments across multiple regions of Platform Equinix (Americas, EMEA
or Asia-Pacific) represented 70% of total recurring revenue.
-- Equinix achieved record bookings from enterprise customers in Q4 2016,
as businesses re-architect their infrastructure to directly and securely
interconnect their people, locations, clouds and data.
-- Wins/expansions included Philips, a global 400 manufacturer
connecting to AWS, Microsoft Azure and IBM SoftLayer in multiple
locations, and Walmart, which is further investing in e-commerce by
optimizing its network topology connecting to Microsoft Azure via
Equinix Cloud Exchange.
-- Equinix has now penetrated more than one-third of the Fortune 500,
and a quarter of the Forbes Global 2000 companies.
-- Equinix continues to deliver growth in the cloud and IT services
vertical led by the EMEA region. Major Infrastructure-as-a-Service
players, such as AWS, Microsoft Azure, IBM SoftLayer, Google Cloud
Platform and Oracle on average have a presence across 15 markets with
Equinix, and they continue to grow. Software-as-a-Service providers are
joining the Equinix Cloud Exchange to provide the performance and
security benefits of private interconnection to their customers, with
Salesforce.com, SAP and ServiceNow deploying across multiple markets in
2017.
-- Interconnection revenue in Q4 2016 grew 21% year over year on an organic
and constant currency basis, as companies continue to adopt an
Interconnection Oriented Architecture(TM) (IOA(TM)) that leverages
Equinix's global platform and ecosystems. With the Telecity
acquisition, Equinix now provides more than 230,000 cross-connects
between the company's more than 8,500 customers.
-- Equinix further strengthened the reach of its global platform with the
announcement of a $3.6 billion definitive agreement to purchase 29 data
centers from Verizon across 15 metro areas in North and South America.
The deal, which includes the addition of strategic facilities and
customers and is expected to close in mid-2017, will increase capacity
in key markets; expand our presence to three new markets - Bogotá,
Culpeper and Houston; enhance Equinix's interconnection density; and
accelerate relationships in the government and energy sectors. Upon
closing of this transaction, the global reach of Platform Equinix will
span 179 data centers, 44 metros and 22 countries. With this
acquisition, Equinix will have invested more than $17 billion in capital
in building out the global footprint of Platform Equinix since the
company was founded.
Business Outlook
For the first quarter of 2017, the Company expects revenues to range between $940 and $946 million, or a constant currency growth rate of 2% quarter over quarter. This guidance includes a negative foreign currency impact of $18 million when compared to the average FX rates in Q4 2016. Cash gross margins are expected to approximate 67-68%. Cash selling, general and administrative expenses are expected to range between $208 and $214 million. Adjusted EBITDA is expected to range between $421 and $427 million, which includes a $10 million negative foreign currency impact when compared to the average FX rates in Q4 2016, $14 million of integration costs from acquisitions and $18 million of seasonally adjusted costs. Capital expenditures are expected to range between $280 and $300 million, which includes approximately $30 million of recurring capital expenditures.
For the full year of 2017, total revenues are expected to be greater than $3,933 million, a normalized and constant currency growth rate of greater than 11% year over year. This guidance includes a negative foreign currency impact of $88 million when compared to prior Equinix guidance rates, and has been normalized for the Telecity January 15th close impact and other acquisition related activities. Total year cash gross margins are expected to approximate 67-68%. Cash selling, general and administrative expenses are expected to range between $805 and $825 million. Adjusted EBITDA is expected to be greater than $1,842 million, a normalized and constant currency growth rate of greater than 11% year over year. This guidance includes $37 million of negative foreign currency impact on adjusted EBITDA when compared to prior Equinix guidance rates and an expected $30 million in integration costs. AFFO is expected to be greater than $1,249 million. Capital expenditures are expected to range between $1,100 and $1,200 million, including approximately $160 - $165 million of recurring capital expenditures and $940 - $1,035 million of non-recurring capital expenditures.
The U.S. dollar exchange rates used for 2017 guidance, taking into consideration the impact of our foreign currency hedges, have been updated to $1.08 to the Euro, $1.40 to the Pound, S$1.45 to the U.S. dollar, ¥117.65 to the U.S. dollar and R$3.26 to the U.S. dollar. The 2017 global revenue breakdown by currency for the Euro, Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 19%, 9%, 6%, 7% 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, amortization of deferred financing costs, gains (losses) on debt extinguishment, an income tax expense adjustment, recurring capital expenditures and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items.
Q4 2016 Results Conference Call and Replay Information
Equinix will discuss its quarterly results for the period ended December 31, 2016, along with its future outlook, in its quarterly conference call on Wednesday, February 15, 2017, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live webcast of the call will be available on Equinix's Investor Relations website at www.equinix.com/investors. To hear the conference call live, please dial 1-210-234-8004 (domestic and international) and reference the passcode EQIX.
A replay of the call will be available one hour after the call, through Tuesday, May 16, 2017, by dialing 1-402-220-6419 and referencing the passcode 2017. In addition, the webcast will be available at www.equinix.com/investors. No password is required for the webcast.
Investor Presentation and Supplemental Financial Information
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 Equinix's Investor Relations website at www.equinix.com/investors.
Additional Resources
-- Q4 2016 financial earnings press release (PDF)
-- Q4 2016 financial tables (PDF)
About Equinix
Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most interconnected data centers. In 41 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies.
Non-GAAP Financial Measures
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 presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents income or loss from operations plus depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, acquisition costs and gains on asset sales.
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, acquisition costs and gains 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 an IBX center, and do not reflect its current or future cash spending levels to support its business. Its IBX centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of an IBX center do not recur with respect to such data center, although Equinix may incur initial construction costs in future periods with respect to additional IBX centers, and future capital expenditures remain minor relative to the initial investment. This is a trend it expects to continue. In addition, depreciation is also based on the estimated useful lives of the IBX centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX centers and are not indicative of current or expected future capital expenditures. Therefore, 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, the timing, size and nature of equity awards. As such, Equinix and many investors and analysts, exclude this 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 centers, which it did not intend to build out, or its decision to reverse such restructuring charges. Equinix also excludes impairment charges related to certain long-lived assets. The impairment charges are related to expense recognized whenever events or changes in circumstances indicate that the carrying amount of long-lived assets are not recoverable. Equinix also excludes gains on asset sales as it represents profit that is not meaningful in evaluating the current or future operating performance. Finally, Equinix excludes acquisition costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The acquisition costs relate to costs Equinix incurs in connection with business combinations. 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 acquisitions. Management believes items such as restructuring charges, impairment charges, acquisition costs and gains on asset sales are non-core transactions; however, these types of costs may occur in future periods.
Equinix also presents funds from operations ("FFO") and adjusted funds from operations ("AFFO"), which are non-GAAP financial measures commonly used in the REIT industry. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income (loss), excluding gains (losses) from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. AFFO represents FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition costs, an installation revenue adjustment, a straight-line rent expense adjustment, amortization of deferred financing costs, gains (losses) on debt extinguishment, an income tax expense adjustment, recurring capital expenditures, net income (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 acquisition costs for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.
Equinix includes an adjustment for revenue from installation fees, since installation fees are deferred and recognized ratably over the expected life of the installation, although the fees are generally paid in a lump sum upon installation. 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. The adjustments for both installation revenue and straight-line rent expense are intended to isolate the cash activity included within the straight-lined or amortized results in the consolidated statement of operations. Equinix excludes the amortization of deferred financing costs as these expenses relate to the initial costs incurred in connection with its debt financings that have no current or future cash obligations. Equinix excludes gains (losses) 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 centers or other assets that are required to support current revenues. Equinix also excludes net income (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 financials 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 (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, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenue from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; and other risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
Equinix and IBX are registered trademarks of Equinix, Inc. International Business Exchange is a trademark of Equinix, Inc.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, September 30, December 31, December 31, December 31,
2016 2016 2015 2016 2015
---- ---- ---- ---- ----
Recurring revenues $892,442 $877,006 $686,072 $3,417,374 $2,569,141
Non-recurring revenues 50,205 47,670 44,390 194,615 156,726
------ ------ ------ ------- -------
Revenues 942,647 924,676 730,462 3,611,989 2,725,867
Cost of revenues 465,921 470,302 351,968 1,820,870 1,291,506
------- ------- ------- --------- ---------
Gross profit 476,726 454,374 378,494 1,791,119 1,434,361
------- ------- ------- --------- ---------
Operating expenses:
Sales and
marketing 113,384 110,936 88,439 438,742 332,012
General and
administrative 178,956 181,239 136,829 694,561 493,284
Impairment
charges - 7,698 - 7,698 -
Acquisition
costs (440) 12,505 17,349 64,195 41,723
(Gain) loss on
asset sales 371 (27,945) - (32,816) -
Total operating expenses 292,271 284,433 242,617 1,172,380 867,019
------- ------- ------- --------- -------
Income from continuing operations 184,455 169,941 135,877 618,739 567,342
------- ------- ------- ------- -------
Interest and other income (expense):
Interest income 948 762 1,206 3,476 3,581
Interest expense (98,761) (92,200) (79,499) (392,156) (299,055)
Other income
(expense) (1,707) 2,938 (48,617) (57,924) (60,581)
Loss on debt
extinguishment (1,777) (9,894) (289) (12,276) (289)
Total interest and other, net (101,297) (98,394) (127,199) (458,880) (356,344)
-------- ------- -------- -------- --------
Income from continuing operations
before income taxes 83,158 71,547 8,678 159,859 210,998
Income tax
benefit
(expense) (19,494) (22,778) 2,053 (45,451) (23,224)
-----------
Net income from continuing operations 63,664 48,769 10,731 114,408 187,774
Net income
(loss) from
discontinued
operations, net
of tax (1,914) 2,681 - 12,392 -
Net income $61,750 $51,450 $10,731 $126,800 $187,774
======= ======= ======= ======== ========
Net income per share:
Basic net income
per share from
continuing
operations $0.89 $0.69 $0.18 $1.63 $3.25
Basic net income
(loss) per
share from
discontinued
operations (0.03) 0.04 - 0.18 -
Basic net income
per share $0.86 $0.73 $0.18 $1.81 $3.25
=================
Diluted net
income per
share from
continuing
operations $0.88 $0.68 $0.18 $1.62 $3.21
Diluted net
income (loss)
per share from
discontinued
operations (0.02) 0.04 - 0.17 -
Diluted net
income per
share $0.86 $0.72 $0.18 $1.79 $3.21
============
Shares used in
computing basic
net income per
share 71,389 71,190 60,393 70,117 57,790
===============
Shares used in
computing
diluted net
income per
share 71,959 71,908 60,943 70,816 58,483
===============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, September 30, December 31, December 31, December 31,
2016 2016 2015 2016 2015
---- ---- ---- ---- ----
Net income $61,750 $51,450 $10,731 $126,800 $187,774
------- ------- ------- -------- --------
Other comprehensive loss, net of tax:
Foreign currency translation
adjustment ("CTA") loss (292,355) (32,603) (37,217) (507,420) (186,763)
Unrealized gain (loss) on
available-for-sale securities (133) 1,487 (139) 2,249 (40)
Unrealized gain (loss) on cash flow
hedges 15,762 (4,153) 4,975 19,551 4,550
Net investment hedge CTA gain
(loss) 41,342 (34,721) 10,447 45,505 4,484
Net actuarial gain on defined
benefit plans 11 7 887 32 1,153
Other comprehensive loss,
net of tax: (235,373) (69,983) (21,047) (440,083) (176,616)
-------- ------- ------- -------- --------
Comprehensive income (loss),
net of tax $(173,623) $(18,533) $(10,316) $(313,283) $11,158
========= ======== ======== ========= =======
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets December 31, December 31,
2016 2015
---- ----
Cash and cash equivalents $748,476 $2,228,838
Short-term investments 3,409 12,875
Accounts receivable, net 396,245 291,964
Current portion of restricted cash 15,065 479,417
Other current assets 304,331 212,929
Assets held for sale - 33,257
Total current
assets 1,467,526 3,259,280
Long-term investments 10,042 4,584
Property, plant and equipment, net 7,199,210 5,606,436
Goodwill 2,986,064 1,063,200
Intangible assets, net 719,231 224,565
Other assets 226,298 198,630
Total assets $12,608,371 $10,356,695
============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $581,739 $400,948
Accrued property, plant and equipment 144,842 103,107
Current portion of capital lease and
other financing obligations 101,046 40,121
Current portion of mortgage and loans
payable 67,928 770,236
Convertible debt - 146,121
Other current liabilities 133,140 192,286
Liabilities held for sale - 3,535
Total current
liabilities 1,028,695 1,656,354
Capital lease and other financing
obligations, less current portion 1,410,742 1,287,139
Mortgage and loans payable, less
current portion 1,369,087 472,769
Senior notes 3,810,770 3,804,634
Other liabilities 623,248 390,413
Total
liabilities 8,242,542 7,611,309
------------
Common stock 72 62
Additional paid-in capital 7,413,519 4,838,444
Treasury stock (147,559) (7,373)
Accumulated dividends (1,969,645) (1,468,472)
Accumulated other comprehensive loss (949,142) (509,059)
Retained earnings (accumulated
deficit) 18,584 (108,216)
Total
stockholders'
equity 4,365,829 2,745,386
------------
Total
liabilities and
stockholders'
equity $12,608,371 $10,356,695
================
Ending headcount by geographic region is as follows:
Americas
headcount 2,510 2,329
EMEA headcount 2,063 1,188
Asia-Pacific
headcount 1,420 1,525
Total headcount 5,993 5,042
===== =====
EQUINIX, INC.
SUMMARY OF DEBT PRINCIPAL OUTSTANDING
(in thousands)
(unaudited)
December 31, December 31,
2016 2015
---- ----
Capital lease and
other financing
obligations $1,511,788 $1,327,260
---------- ----------
Term loans, net of
debt discount and
debt issuance costs 993,572 454,503
Japanese Yen term
loan, net of debt
issuance costs 397,199 -
Brazil financings,
net of debt issuance
costs - 26,668
Mortgage payable and
other loans payable 46,244 436,212
Revolving credit
facility borrowings - 325,622
Plus: debt discount,
debt issuance costs
and premium, net 20,949 694
Total mortgage and loans
payable principal 1,457,964 1,243,699
---------
Senior notes, net of
debt issuance costs 3,810,770 3,804,634
Plus: debt issuance
costs 39,230 45,366
Total senior notes principal 3,850,000 3,850,000
---------
Convertible debt, net
of debt discount and
debt issuance costs - 146,121
Plus: debt discount
and debt issuance
costs - 3,961
Total convertible debt
principal - 150,082
-----------------------
Total debt principal
outstanding $6,819,752 $6,571,041
========== ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, September 30, December 31, December 31, December 31,
2016 2016 2015 2016 2015
---- ---- ---- ---- ----
Cash flows from operating activities:
Net income $61,750 $51,450 $10,731 $126,800 $187,774
Adjustments to
reconcile net income
to net cash
provided by operating
activities:
Depreciation,
amortization and
accretion 212,268 215,370 144,861 843,510 528,929
Stock-based
compensation 39,837 42,346 33,868 155,567 132,443
Amortization of
debt issuance
costs and debt
discounts 5,428 2,684 4,493 19,137 16,050
Loss on debt
extinguishment 1,777 10,181 289 12,276 289
Impairment charges - 7,698 - 7,698 -
(Gain) loss on
asset sales 371 (27,945) - (32,816) -
(Gain) loss on
sale of
discontinued
operations 1,891 (4,242) - (2,351) -
Other items 3,706 3,905 5,452 19,793 18,148
Changes in
operating assets
and liabilities:
Accounts
receivable (27,423) (30,440) (2,581) (100,230) (44,583)
Income taxes,
net 27,999 24,776 (25,056) 29,020 (109,579)
Accounts
payable and
accrued
expenses 73,091 (901) 33,906 61,565 109,125
Other assets
and
liabilities (101,385) 39,290 29,155 (123,389) 56,197
Net cash provided by
operating activities 299,310 334,172 235,118 1,016,580 894,793
------- ------- ------- --------- -------
Cash flows from investing activities:
Purchases, sales and
maturities of
investments, net 779 (2,123) (9,369) 10,839 514,108
Business acquisitions,
net of cash acquired 621 (165,901) (235,306) (1,766,907) (245,553)
Purchases of real
estate - - - (28,118) (38,282)
Purchases of other
property, plant and
equipment (386,321) (279,477) (280,612) (1,113,365) (868,120)
Proceeds from asset
sales 23,385 805,372 - 851,582 -
Other investing
activities 9,078 (21,851) (3,709) 453,814 (497,080)
Net cash provided by (used
in) investing activities (352,458) 336,020 (528,996) (1,592,155) (1,134,927)
-------- ------- -------- ---------- ----------
Cash flows from financing activities:
Proceeds from employee
equity awards 36 16,504 185 34,179 30,040
Payments of dividend
distributions (125,312) (127,457) (230,452) (499,463) (521,461)
Proceeds from public
offering of common
stock, net of
issuance costs - - 829,496 - 829,496
Proceeds from loans
payable 457,900 9,154 707,108 1,168,304 1,197,108
Proceeds from senior
notes - - 1,100,000 - 1,100,000
Repayment of capital
lease and other
financing obligations (13,522) (55,528) (8,450) (114,385) (28,663)
Repayments of mortgage
and loans payable and
convertible debt (476,474) (13,354) (185,823) (1,462,939) (715,270)
Debt extinguishment
costs (1,199) (10,181) - (11,380) -
Debt issuance costs 370 (11,709) (17,481) (11,381) (18,098)
Other financing
activities 1,308 1,465 (1,633) 2,773 30
Net cash provided by (used
in) financing activities (156,893) (191,106) 2,192,950 (894,292) 1,873,182
-------- -------- --------- -------- ---------
Effect of foreign currency exchange rates on cash and
cash equivalents (33,153) 4,313 (5,703) (10,495) (15,127)
------- ----- ------ ------- -------
Change in cash balances included in assets held for
sale 3,755 21,356 - - -
----- ------ --- --- ---
Net increase (decrease) in cash and cash equivalents (239,439) 504,755 1,893,369 (1,480,362) 1,617,921
Cash and cash equivalents at beginning of period 987,915 483,160 335,469 2,228,838 610,917
Cash and cash equivalents at end of period $748,476 $987,915 $2,228,838 $748,476 $2,228,838
======== ======== ========== ======== ==========
Supplemental cash flow
information:
Cash paid
(refunded) for
taxes $7,817 $(73) $29,165 $39,320 $132,302
====== ==== ======= ======= ========
Cash paid for
interest $78,553 $111,094 $73,044 $350,083 $237,410
======= ======== ======= ======== ========
Free cash flow (negative free cash flow) (1) $(53,927) $672,315 $(284,509) $(586,414) $(754,242)
======== ======== ========= ========= =========
Adjusted free cash flow (adjusted negative free cash
flow) (2) $(53,240) $839,681 $(33,081) $1,211,384 $(385,543)
======== ======== ======== ========== =========
(1) We define free cash flow as net cash provided by operating
activities plus net cash provided by (used in) investing
activities (excluding the net purchases, sales and
maturities of investments) as presented below:
Net cash provided by
operating activities
as presented above $299,310 $334,172 $235,118 $1,016,580 $894,793
Net cash provide by
(used in) investing
activities as
presented above (352,458) 336,020 (528,996) (1,592,155) (1,134,927)
Purchases, sales and
maturities of
investments, net (779) 2,123 9,369 (10,839) (514,108)
Free cash flow
(negative free
cash flow) $(53,927) $672,315 $(284,509) $(586,414) $(754,242)
======== ======== ========= ========= =========
(2) We define adjusted free cash flow as free cash flow (as
defined above) excluding any purchases of real estate,
acquisitions, any excess tax benefits from employee equity
awards, cash paid for taxes associated with reclassifying
our assets for tax purposes triggered by our conversion
into a real estate investment trust ("REIT") and costs
related to the REIT conversion, as presented below:
Free cash flow (as
defined above) $(53,927) $672,315 $(284,509) $(586,414) $(754,242)
Less business
acquisitions, net of
cash (621) 165,901 235,306 1,766,907 245,553
Less purchases of real
estate - - - 28,118 38,282
Less excess tax
benefits from
employee equity
awards 1,308 1,465 (1,633) 2,773 30
Less cash paid for
taxes resulting from
the REIT conversion - - 17,306 - 82,452
Less costs related to
the REIT conversion - - 449 - 2,382
Adjusted free cash
flow $(53,240) $839,681 $(33,081) $1,211,384 $(385,543)
======== ======== ======== ========== =========
We categorize our cash paid for taxes into cash paid for
taxes resulting from the REIT conversion (as defined above)
and other cash taxes paid.
Cash paid for taxes
resulting from the
REIT conversion $ - $ - $17,306 $ - $82,452
Other cash taxes paid 7,817 (73) 11,859 39,320 49,850
Total cash paid
for taxes $7,817 $(73) $29,165 $39,320 $132,302
====== ==== ======= ======= ========
EQUINIX, INC.
NON-GAAP MEASURES AND OTHER SUPPLEMENTAL DATA
---------------------------------------------
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, September 30, December 31, December 31, December 31,
2016 2016 2015 2016 2015
---- ---- ---- ---- ----
Recurring revenues $892,442 $877,006 $686,072 $3,417,374 $2,569,141
Non-recurring revenues 50,205 47,670 44,390 194,615 156,726
Revenues (1) 942,647 924,676 730,462 3,611,989 2,725,867
Cash cost of revenues (2) 301,540 304,821 227,956 1,169,494 836,439
------- ------- ------- --------- -------
Cash gross profit (3) 641,107 619,855 502,506 2,442,495 1,889,428
------- ------- ------- --------- ---------
Cash operating expenses (4):
Cash sales and marketing
expenses (5) 85,196 79,515 72,069 322,474 269,270
Cash general and
administrative expenses
(6) 119,420 120,298 97,292 462,547 348,531
Total cash operating expenses
(7) 204,616 199,813 169,361 785,021 617,801
------- ------- ------- ------- -------
Adjusted EBITDA (8) $436,491 $420,042 $333,145 $1,657,474 $1,271,627
======== ======== ======== ========== ==========
Cash gross margins (9) 68% 67% 69% 68% 69%
=== === === === ===
Adjusted EBITDA margins (10) 46% 45% 46% 46% 47%
=== === === === ===
Adjusted EBITDA flow-through rate (11) 92% (1%) 27% 44% 56%
=== === === === ===
FFO (12) $219,868 $187,831 $131,483 $725,089 $629,238
======== ======== ======== ======== ========
AFFO (13) (14) $293,785 $284,179 $178,293 $1,078,339 $831,798
======== ======== ======== ========== ========
(1) The geographic split of
our revenues on a
services basis is
presented below:
Americas Revenues:
Colocation $299,200 $294,046 $274,198 $1,161,665 $1,059,713
Interconnection 100,459 94,865 84,796 374,655 321,198
Managed infrastructure 14,385 14,649 10,927 53,404 48,042
Other 943 902 817 3,360 3,131
Recurring
revenues 414,987 404,462 370,738 1,593,084 1,432,084
Non-recurring revenues 21,555 20,680 23,751 86,465 80,451
Revenues 436,542 425,142 394,489 1,679,549 1,512,535
------- ------- ------- --------- ---------
EMEA Revenues:
Colocation 242,829 244,420 146,879 941,848 562,817
Interconnection 22,280 21,464 16,775 85,869 58,490
Managed infrastructure 17,243 16,359 7,619 67,553 25,196
Other 2,919 3,947 862 11,382 5,275
Recurring
revenues 285,271 286,190 172,135 1,106,652 651,778
Non-recurring revenues 16,353 15,060 10,519 64,687 47,029
Revenues 301,624 301,250 182,654 1,171,339 698,807
------- ------- ------- --------- -------
Asia-Pacific Revenues:
Colocation 146,483 140,493 112,498 543,581 397,345
Interconnection 23,159 21,172 18,979 82,521 62,061
Managed infrastructure 22,362 24,138 9,447 89,335 23,598
Other 180 551 2,275 2,201 2,275
Recurring
revenues 192,184 186,354 143,199 717,638 485,279
Non-recurring revenues 12,297 11,930 10,120 43,463 29,246
Revenues 204,481 198,284 153,319 761,101 514,525
------- ------- ------- ------- -------
Worldwide Revenues:
Colocation 688,512 678,959 533,575 2,647,094 2,019,875
Interconnection 145,898 137,501 120,550 543,045 441,749
Managed infrastructure 53,990 55,146 27,993 210,292 96,836
Other 4,042 5,400 3,954 16,943 10,681
Recurring
revenues 892,442 877,006 686,072 3,417,374 2,569,141
Non-recurring revenues 50,205 47,670 44,390 194,615 156,726
Revenues $942,647 $924,676 $730,462 $3,611,989 $2,725,867
======== ======== ======== ========== ==========
(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 $465,921 $470,302 $351,968 $1,820,870 $1,291,506
Depreciation,
amortization and
accretion expense (161,049) (162,165) (121,505) (638,290) (445,189)
Stock-based compensation
expense (3,332) (3,316) (2,507) (13,086) (9,878)
Cash cost of
revenues $301,540 $304,821 $227,956 $1,169,494 $836,439
======== ======== ======== ========== ========
The geographic split of
our cash cost of
revenues is presented
below:
Americas cash cost of
revenues $115,838 $114,934 $107,640 $449,088 $410,915
EMEA cash cost of
revenues 113,796 116,587 64,089 446,842 249,457
Asia-Pacific cash cost
of revenues 71,906 73,300 56,227 273,564 176,067
Cash cost of
revenues $301,540 $304,821 $227,956 $1,169,494 $836,439
======== ======== ======== ========== ========
(3) We define cash gross profit as revenues less cash cost of revenues (as defined
above).
(4) We define cash operating expenses as operating expenses less depreciation,
amortization, stock-based compensation and acquisition costs. We also refer
to cash operating expenses as cash selling, marketing, 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 $113,384 $110,936 $88,439 $438,742 $332,012
Depreciation and
amortization expense (17,345) (19,719) (7,329) (73,238) (25,895)
Stock-based compensation
expense (10,843) (11,702) (9,041) (43,030) (36,847)
Cash sales and
marketing
expenses $85,196 $79,515 $72,069 $322,474 $269,270
======= ======= ======= ======== ========
(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 $178,956 $181,239 $136,829 $694,561 $493,284
Depreciation and
amortization expense (33,874) (33,486) (16,027) (131,982) (57,845)
Stock-based compensation
expense (25,662) (27,455) (23,510) (100,032) (86,908)
Cash general and
administrative
expenses $119,420 $120,298 $97,292 $462,547 $348,531
======== ======== ======= ======== ========
(7) Our cash operating expenses, or cash SG&A, as defined above, is presented below:
Cash sales and marketing
expenses $85,196 $79,515 $72,069 $322,474 $269,270
Cash general and
administrative expenses 119,420 120,298 97,292 462,547 348,531
Cash SG&A $204,616 $199,813 $169,361 $785,021 $617,801
======== ======== ======== ======== ========
The geographic split of our cash operating expenses, or cash SG&A, is presented
below:
Americas cash SG&A $115,012 $108,077 $106,035 $443,150 $403,016
EMEA cash SG&A 59,977 63,195 36,971 230,234 130,789
Asia-Pacific cash SG&A 29,627 28,541 26,355 111,637 83,996
Cash SG&A $204,616 $199,813 $169,361 $785,021 $617,801
======== ======== ======== ======== ========
(8) We define adjusted EBITDA as income from continuing operations excluding
depreciation, amortization, accretion, stock-based compensation expense,
impairment charges, acquisition costs and gains on asset sales as presented
below:
Income from continuing
operations $184,455 $169,941 $135,877 $618,739 $567,342
Depreciation,
amortization and
accretion expense 212,268 215,370 144,861 843,510 528,929
Stock-based compensation
expense 39,837 42,473 35,058 156,148 133,633
Impairment charges - 7,698 - 7,698 -
Acquisition costs (440) 12,505 17,349 64,195 41,723
(Gain) loss on asset
sales 371 (27,945) - (32,816) -
Adjusted EBITDA $436,491 $420,042 $333,145 $1,657,474 $1,271,627
======== ======== ======== ========== ==========
The geographic split of our adjusted EBITDA is presented below:
Americas income from
continuing operations $87,537 $89,004 $83,425 $352,180 $324,458
Americas depreciation,
amortization and
accretion expense 83,305 82,204 73,023 321,103 278,644
Americas stock-based
compensation expense 28,312 29,309 25,576 109,740 100,760
Americas acquisition
costs 6,538 1,614 (1,210) 9,530 (5,258)
Americas gain on asset
sales - - - (5,242) -
Americas
adjusted EBITDA 205,692 202,131 180,814 787,311 698,604
------- ------- ------- ------- -------
EMEA income from
continuing operations 51,347 51,829 34,011 124,853 145,527
EMEA depreciation,
amortization and
accretion expense 76,598 78,555 30,434 314,570 118,008
EMEA stock-based
compensation expense 6,884 8,138 4,348 28,317 16,690
EMEA acquisition costs (6,978) 10,891 12,801 54,468 38,336
EMEA gain on asset sales - (27,945) - (27,945) -
EMEA adjusted
EBITDA 127,851 121,468 81,594 494,263 318,561
------- ------- ------ ------- -------
Asia-Pacific income from
continuing operations 45,571 29,108 18,441 141,706 97,357
Asia-Pacific
depreciation,
amortization and
accretion expense 52,365 54,611 41,404 207,837 132,277
Asia-Pacific stock-
based compensation
expense 4,641 5,026 5,134 18,091 16,183
Asia-Pacific impairment
charges - 7,698 - 7,698 -
Asia-Pacific acquisition
costs - - 5,758 197 8,645
Asia-Pacific loss on
asset sales 371 - - 371 -
Asia-Pacific
adjusted EBITDA 102,948 96,443 70,737 375,900 254,462
------- ------ ------ ------- -------
Adjusted EBITDA $436,491 $420,042 $333,145 $1,657,474 $1,271,627
======== ======== ======== ========== ==========
(9) We define cash gross
margins as cash gross
profit divided by
revenues.
Our cash gross margins by
geographic region is
presented below:
Americas cash gross
margins 73% 73% 73% 73% 73%
===
EMEA cash gross margins 62% 61% 65% 62% 64%
===
Asia-Pacific cash gross
margins 65% 63% 63% 64% 66%
===
(10) We define adjusted EBITDA
margins as adjusted
EBITDA divided by
revenues.
Americas adjusted EBITDA
margins 47% 48% 46% 47% 46%
===
EMEA adjusted EBITDA
margins 42% 40% 45% 42% 46%
===
Asia-Pacific adjusted
EBITDA margins 50% 49% 46% 49% 49%
===
(11) We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA
growth divided by incremental revenue growth as follows:
Adjusted EBITDA -current
period $436,491 $420,042 $333,145 $1,657,474 $1,271,627
Less adjusted EBITDA -
prior period (420,042) (420,291) (321,472) (1,271,627) (1,113,891)
Adjusted EBITDA
growth $16,449 $(249) $11,673 $385,847 $157,736
======= ===== ======= ======== ========
Revenues - current period $942,647 $924,676 $730,462 $3,611,989 $2,725,867
Less revenues -prior
period (924,676) (900,510) (686,649) (2,725,867) (2,443,776)
Revenue growth $17,971 $24,166 $43,813 $886,122 $282,091
======= ======= ======= ======== ========
Adjusted EBITDA flow-
through rate 92% (1%) 27% 44% 56%
===
(12) FFO is defined as net income (loss), excluding gains (losses) from the
disposition of real estate assets, depreciation and amortization on real estate
assets and adjustments for unconsolidated joint ventures' and non-controlling
interests' share of these items.
Net income $61,750 $51,450 $10,731 $126,800 $187,774
Adjustments:
Real estate
depreciation
and
amortization 157,054 159,788 120,144 626,564 439,969
(Gain) loss on
disposition of
real estate
property 1,036 (23,436) 579 (28,388) 1,382
Adjustments for
FFO from
unconsolidated
joint ventures 28 29 29 113 113
FFO $219,868 $187,831 $131,483 $725,089 $629,238
======== ======== ======== ======== ========
(13) AFFO is defined as FFO, excluding depreciation and amortization expense on non-
real estate assets, accretion, stock-based compensation, restructuring
charges, impairment charges, acquisition costs, an installation revenue
adjustment, a straight-line rent expense adjustment, amortization of deferred
financing costs, gains (losses) on debt extinguishment, an income tax expense
adjustment, net income from 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 $219,868 $187,831 $131,483 $725,089 $629,238
Adjustments:
Installation
revenue
adjustment 4,788 4,612 5,843 20,161 35,498
Straight-line
rent expense
adjustment 1,986 2,686 1,462 7,700 7,931
Amortization of
deferred
financing costs 5,258 2,687 4,495 18,696 16,135
Stock-based
compensation
expense 39,837 42,474 35,058 156,149 133,633
Non-real estate
depreciation
expense 23,265 22,108 15,921 87,781 58,165
Amortization
expense 29,478 32,929 8,100 122,862 27,446
Accretion
expense 2,471 545 696 6,303 3,349
Recurring
capital
expenditures (36,476) (41,600) (44,668) (141,819) (120,281)
Loss on debt
extinguishment 1,777 9,894 289 12,276 289
Acquisition
costs (440) 12,505 17,349 64,195 41,723
Impairment
charges - 7,698 - 7,698 -
Income tax
expense
adjustment 68 2,501 2,279 3,680 (1,270)
Net (income)
loss from
discontinued
operations, net
of tax 1,914 (2,681) - (12,392) -
Adjustments for
AFFO from
unconsolidated
joint ventures (9) (10) (14) (40) (58)
AFFO $293,785 $284,179 $178,293 $1,078,339 $831,798
======== ======== ======== ========== ========
(14) Following is how we reconcile from adjusted EBITDA to AFFO:
Adjusted EBITDA $436,491 $420,042 $333,145 $1,657,474 $1,271,627
Adjustments:
Interest
expense, net of
interest income (97,813) (91,437) (78,293) (388,679) (295,474)
Amortization of
deferred
financing costs 5,258 2,687 4,495 18,696 16,135
Income tax
benefit
(expense) (19,494) (22,778) 2,053 (45,451) (23,224)
Income tax
expense
adjustment 68 2,501 2,279 3,680 (1,270)
Straight-line
rent expense
adjustment 1,986 2,686 1,462 7,700 7,931
Installation
revenue
adjustment 4,788 4,612 5,843 20,161 35,498
Recurring
capital
expenditures (36,476) (41,600) (44,668) (141,819) (120,281)
Other income
(expense) (1,707) 2,938 (48,617) (57,924) (60,581)
(Gain) loss on
disposition of
depreciable
real estate
property 1,036 (23,436) 579 (28,388) 1,382
Adjustments for
unconsolidated
JVs' and non-
controlling
interests 19 19 15 73 55
Adjustment for
gain (loss) on
sale of asset (371) 27,945 - 32,816 -
AFFO $293,785 $284,179 $178,293 $1,078,339 $831,798
======== ======== ======== ========== ========
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SOURCE Equinix, Inc.
