This is the Tagline, edited under "Misc Content"
Jul 28, 2010
FOSTER CITY, CA — July 28, 2010 — Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, today reported quarterly results for the quarter ended June 30, 2010. This quarter includes the results from the acquisition of Switch & Data Facilities Company, Inc. from May 1, 2010, which is referred to as the Switch and Data acquisition.
Revenues were $296.1 million for the second quarter, a 19% increase over the previous quarter and a 39% increase over the same quarter last year. This result included $37.6 million in revenues from Switch and Data for the quarter. Recurring revenues, consisting primarily of colocation, interconnection and managed services were $282.1 million for the second quarter, a 19% increase over the previous quarter and a 39% increase over the same quarter last year. Non-recurring revenues were $14.0 million in the quarter.
“Equinix saw strong Q2 financial results in all three of its operating regions and is on target to meet 2010 objectives,” said Steve Smith, CEO and President of Equinix. “The integration of Switch and Data is ahead of schedule, and our expansions are providing us much needed capacity in many of our key markets, which positions us well for further growth.”
Cost of revenues were $162.6 million for the second quarter, a 22% increase from the previous quarter and a 37% increase over the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $58.7 million, were $103.9 million for the second quarter, a 22% increase over the previous quarter and a 38% increase over the same quarter last year. Cash gross margins, defined as gross profit less depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 65%, down from 66% for the previous quarter and unchanged from the same quarter last year.
Selling, general and administrative expenses were $83.1 million for the second quarter, a 33% increase over the previous quarter and a 54% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $23.1 million, were $60.0 million for the second quarter, a 30% increase over the previous quarter and a 56% increase over the same quarter last year.
Restructuring charges were $4.4 million for the second quarter, which were primarily related to the termination benefits attributed to certain Switch and Data employees. Acquisition costs were $5.8 million for the second quarter. Our acquisition costs for the second quarter were primarily related to professional fees from the Switch and Data acquisition. Integration costs were $1.2 million for the quarter and primarily related to consulting and IT related expenditures to integrate Switch and Data.
Net loss for the second quarter was $2.3 million. This represents a basic and diluted net loss per share of $0.05 based on a weighted average share count of 43.5 million for the second quarter of 2010.
Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges and acquisition costs for the second quarter, was $132.2 million, an increase of 13% over the previous quarter and a 33% 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 second quarter, were $148.7 million, of which $121.8 million was attributed to expansion capital expenditures and $26.9 million was attributed to ongoing capital expenditures.
The Company generated cash from operating activities of $56.9 million for the second quarter as compared to $99.8 million in the previous quarter and $78.7 million the same quarter last year. Cash used in investing activities was $327.4 million in the second quarter as compared to $31.6 million in the previous quarter and $204.1 million for the same quarter last year. Cash used in financing activities was $252.2 million primarily related to the repayment of certain mortgage and loans payable.
As of June 30, 2010, the Company's cash, cash equivalents and investments were $722.0 million, as compared to $1,185.1 million as of March 31, 2010, a net change of $463.1 million, including cash used to acquire Switch and Data and the repayment of certain mortgage and loans payable.
Company Metrics and Q2 Results Presentation
Business Outlook
For the third quarter of 2010, the Company expects revenues to be in the range of $335.0 to $338.0 million. Cash gross margins are expected to range between 63% and 64%. Cash selling, general and administrative expenses are expected to approximate $75.0 million. Adjusted EBITDA is expected to be between $136.0 and $139.0 million. Capital expenditures are expected to be between $185.0 to $210.0 million, comprised of approximately $45.0 million of ongoing capital expenditures and $140.0 to $165.0 million of expansion capital expenditures.
For the full year of 2010, total revenues are expected to be in the range of $1,225.0 to $1,235.0 million. Total year cash gross margins are expected to be approximately 64%. Cash selling, general and administrative expenses are expected to approximate $250.0 million. Adjusted EBITDA for the year is expected to be between $535.0 and $540.0 million. Capital expenditures for 2010 are expected to be in the range of $530.0 to $580.0 million, comprised of approximately $110.0 million of ongoing capital expenditures and $420.0 to $470.0 million for expansion capital expenditures.
The Company will discuss its results and guidance on its quarterly conference call on Wednesday, July 28, 2010, 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 for thirty days. To hear the conference call live, please dial 773-756-4788 (domestic and international) and reference the passcode (EQIX). A simultaneous live Webcast of the call will also be available at www.equinix.com/investors.
A replay of the call will be available beginning on Wednesday, July 28, 2010 at 7:30 p.m. (ET) through August 26, 2010 by dialing 203-369-0872 and referencing the passcode (2010). In addition, the webcast will be available on the company's web site at www.equinix.com/investors. No password is required for the webcast.
About Equinix
Equinix, Inc. (Nasdaq: EQIX) provides global data center services that ensure the vitality of the information-driven world. Global enterprises, content and financial companies and more than 595 network service providers rely upon Equinix's insight and expertise to protect and connect their most valued information assets. Equinix operates 89 International Business Exchange™ (IBX®) and partner data centers across 35 markets in North America, Europe and Asia-Pacific.
Important information about Equinix is routinely posted on the investor relations page of its website located at www.equinix.com/investors. We encourage you to check Equinix's website regularly for the most up-to-date information.
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 non-cash stock-based compensation expense as it 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 it was calculated for the periods presented within this press release.
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.