PR Newswire | Feb 10, 2021 04:06PM EST

02/10 15:05 CST

Equinix Reports Fourth Quarter And Full Year 2020 ResultsWorld's Digital Infrastructure Company(tm) Delivers 18th Year of Consecutive Quarterly Revenue Growth REDWOOD CITY, Calif., Feb. 10, 2021

REDWOOD CITY, Calif., Feb. 10, 2021 /PRNewswire/ --

* 2020 annual revenues increased 8% year-over-year on both an as-reported and normalized and constant currency basis to approximately $6 billion. This represents the company's 72nd consecutive quarter of revenue growth * Delivered record channel bookings in Q4, accounting for more than 35% of total bookings * Continues to expand platform, building across 44 projects in 30 markets and 20 countries

Equinix, Inc. (Nasdaq: EQIX), the world's digital infrastructure company, today reported results for the quarter and year ended December 31, 2020. Equinix uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements. All per share results are presented on a fully diluted basis.

2020 Results Summary

* Revenues * $5.999 billion, an 8% increase over the previous year on both an as-reported and normalized and constant currency basis

* Operating Income * $1.053 billion, a 10% decrease from the previous year, and an operating margin of 18%, in part due to increased acquisition costs and the prior year's gain on sale of assets contributed to the EMEA joint venture

* Adjusted EBITDA * $2.853 billion, a 48% adjusted EBITDA margin * Includes $17 million of integration costs

* Net Income and Net Income per Share attributable to Equinix * $370 million, a 27% decrease from the previous year, primarily due to acquisition costs and losses on debt extinguishment related to balance sheet refinancing initiatives * $4.18 per share, a 30% decrease from the previous year

* AFFO and AFFO per Share * $2.189 billion, a 13% increase over the previous year or 18% on a normalized and constant currency basis * $24.76 per share, a 9% increase over the previous year or 12% on a normalized and constant currency basis * Includes $17 million of integration costs

2021 Annual Guidance Summary

* Revenues * $6.580 - $6.640 billion, a 10 - 11% increase over the previous year or a normalized and constant currency increase of 7 - 8%

* Adjusted EBITDA * $3.067 - $3.127 billion, a 47% adjusted EBITDA margin * Includes operational efficiencies offset by investment in new products and services, including xScaleTM, scaling the business and expansion drag * Assumes $30 million of integration costs

* AFFO and AFFO per Share * $2.413 - $2.463 billion, an increase of 10 - 12% over the previous year or a normalized and constant currency increase of 9 - 11% * $26.72 - $27.28 per share, an increase of 8 - 10% over the previous year on both an as-reported and normalized and constant currency basis. This guidance excludes any capital market activities the company may undertake in the future * Assumes $30 million of integration costs

Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income (loss) from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant.

Quote

Charles Meyers, President and CEO, Equinix:

"While 2020 brought about a landscape of challenges and change, Equinix continued to innovate and adapt, serving as a trusted partner to our customers on their digital transformation journey. We continued to extend our market leadership, delivering approximately $6 billion of revenue and driving healthy growth both on the top-line and at the per-share level. As we look ahead, I am as optimistic as ever about our business and the expanding opportunity to serve our customers, partners and shareholders as the world's digital infrastructure company."

Business Highlights

* Equinix continues to invest in its platform services, introducing new product capabilities and expanding market availability, helping to lower the barriers to entry and improving the value of digital transformation for new and existing customers: * On October 6, Equinix launched the availability of Equinix Metal(tm), a fully automated and interconnected Bare Metal as a Service offering. Today, Equinix Metal is available in eight global metros and is expected to be available in 18 global metros in early 2021. * On December 8, Equinix introduced transformative capabilities on Equinix FabricTM and Network Edge, which ease the way enterprises connect their digital infrastructure. With these new capabilities, Equinix Fabric now has native integration built into both Network Edge and Equinix Metal over the Equinix platform and is available in 49 strategic metros across five continents.

* Equinix continued to expand the reach of its global platform and operates across 63 metros in 26 countries. In 2020, Equinix completed 16 new expansions, its most active build year ever, with a sizeable expansion roadmap planned for 2021 to meet growing customer demand. New expansions planned in 2021 include the Geneva, Genoa, Madrid, Manchester, Muscat, New York and Osaka metros, with 44 large projects underway across 30 markets and 20 countries. * Interconnection revenues grew 14% year-over-year on a normalized and constant currency basis driven by strong customer adoption of Equinix Fabric, good traction in internet exchange markets and solid interconnection net adds. Today, Equinix has the most comprehensive global interconnection platform, now comprising over 392,000 physical and virtual interconnections. In Q4, Equinix added 7,700 interconnections, more interconnections than its next 15 competitors combined, driven by continued strength in network and cloud connectivity. Equinix Internet Exchange(r) experienced peak traffic, up 8% quarter-over-quarter and 43% year-over-year, driven by cloud, content and gaming segments. * In Q4, the Network vertical achieved record bookings, driven by telecom carriers upgrading their core and edges to address the shifting traffic patterns resulting from the pandemic, as well as continued strength in enterprise resale. The Financial Services vertical also achieved a record quarter, led by wins and expansions with multinational financial services companies, with particular strength in the Americas region, including the greater New York City metro. * Equinix continues its indirect selling initiatives, as the company pursues high-value strategic channel partnerships. In Q4, channel activity accounted for approximately 35% of bookings. Strength was driven by Equinix's hyperscale and technology alliance partners, with wins across a wide range of industry segments with projects focused on digital transformation efforts, as well as COVID-19 pandemic responses. * Equinix continues to make significant progress with the company's hyperscale strategy with eight projects currently underway across all three regions and a strong pipeline of customer demand. In Q4, Equinix completed the formation of another greater than US$1.0 billion joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund, to develop and operate xScaleTM data centers in Japan.

COVID-19 Update

Many of Equinix's International Business ExchangeTM (IBX(r)) data centers have been identified as "essential businesses" or "critical infrastructure" by local governments for purposes of remaining open during the COVID-19 pandemic, and all IBX data centers remain operational at the time of filing of this press release. Precautionary measures have been implemented during the COVID-19 pandemic to minimize the risk of operational impact and to protect the health and safety of employees, customers, partners and communities. These include implementing tools such as an appointment-based system to control timing and frequency of visits and encouraging customers to leverage IBX technicians via Smart Hands(r) in order to restrict visits and minimize the number of people and the amount of time spent in the IBX data centers. For the health and safety of Equinix employees, the company's corporate offices were closed in March 2020, and non-IBX employees across the globe were instructed to work from home until further notice. A phased plan has been announced for a return-to-office for non-IBX attached sites, and the company has been following this plan to open certain offices with occupancy limits as local conditions allow. Additionally, the company has decided to continue to limit employee travel and has made the decision to either postpone or virtualize global events in response to the COVID-19 pandemic.

Looking ahead, the full impact of the COVID-19 pandemic on the company's financial condition or results of operations remains uncertain and will depend on a number of factors, including its impact on Equinix customers, partners and vendors and the impact on, and functioning of, the global financial markets. The company's past results may not be indicative of future performance, and historical trends may differ materially. Additional information pertaining to the impact of the COVID-19 pandemic on Equinix and the company's response thereto will be provided in the upcoming Form 10-K for the year ended December 31, 2020.

Business Outlook

For the first quarter of 2021, Equinix expects revenues to range between $1.587 and $1.607 billion, an increase of 2% quarter-over-quarter at the midpoint or approximately 1% on a normalized and constant currency basis, including a step-down in non-recurring revenue due to timing of customer installations. This guidance includes a foreign currency benefit of $17 million when compared to the average FX rates in Q4 2020. Adjusted EBITDA is expected to range between $737 and $757 million, which includes a $9 million foreign currency benefit when compared to the average FX rates in Q4 2020, and higher seasonal salary and benefit costs of $14 million attributed to the FICA reset. Adjusted EBITDA includes $9 million of integration costs related to acquisitions. Recurring capital expenditures are expected to range between $17 and $27 million.

For the full year of 2021, total revenues are expected to range between $6.580 and $6.640 billion, a 10 - 11% increase over the previous year, or a normalized and constant currency increase of 7 - 8%. This guidance includes a foreign currency benefit of $106 million when compared to the average FX rates in 2020. Adjusted EBITDA is expected to range between $3.067 and $3.127 billion, an adjusted EBITDA margin of 47%. This adjusted EBITDA includes the impact from strategic investments and a foreign currency benefit of $56 million when compared to the average FX rates in 2020. For the year, the company expects to incur $30 million in integration costs related to acquisitions. AFFO is expected to range between $2.413 and $2.463 billion, an increase of 10 - 12% over the previous year, or a normalized and constant currency increase of 9 - 11%. This AFFO guidance includes $30 million in integration costs related to acquisitions. AFFO per share is expected to range between $26.72 and $27.28, an increase of 8 - 10% over the previous year on both an as-reported and normalized and constant currency basis. This guidance excludes any capital market activities the company may undertake in the future. Non-recurring capital expenditures, excluding xScale-related costs, are expected to range between $2.125 and $2.315 billion and recurring capital expenditures are expected to approximate $180 million. xScale capital expenditures are expected to approximate $250 million.

The U.S. dollar exchange rates used for 2021 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.19 to the Euro, $1.33 to the Pound, S$1.32 to the U.S. dollar, 103 to the U.S. dollar and R$5.19 to the U.S. dollar. The Q4 2020 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 20%, 10%, 7%, 7% and 2%, respectively.

The adjusted EBITDA guidance is based on the revenue guidance less our expectations of cash cost of revenues and cash operating expenses. The AFFO guidance is based on the adjusted EBITDA guidance less our expectations of net interest expense, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, income tax expense, an income tax expense adjustment, recurring capital expenditures, other income (expense), (gains) losses on disposition of real estate property and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items.

Q4 2020 Results Conference Call and Replay Information

Equinix will discuss its quarterly results for the period ended December 31, 2020, along with its future outlook, in its quarterly conference call on Wednesday, February 10, 2021, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live webcast of the call will be available on the company's Investor Relations website at www.equinix.com/investors. To hear the conference call live, please dial 1-517-308-9482 (domestic and international) and reference the passcode EQIX.

A replay of the call will be available one hour after the call, through Wednesday, April 28, 2021, by dialing 1-203-369-1057 and entering passcode (2021). In addition, the webcast will be available on the company's website at www.equinix.com/investors (no password required).

Investor Presentation and Supplemental Financial Information

Equinix has made available on its website a presentation designed to accompany the discussion of Equinix's results and future outlook, along with certain supplemental financial information and other data. Interested parties may access this information through the Equinix Investor Relations website at www.equinix.com/investors.

Additional Resources

* Equinix Investor Relations Resources

About Equinix

Equinix (Nasdaq: EQIX) is the world's digital infrastructure company, enabling digital leaders to harness a trusted platform to bring together and interconnect the foundational infrastructure that powers their success. Equinix enables today's businesses to access all the right places, partners and possibilities they need to accelerate advantage. With Equinix, they can scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value.

Non-GAAP Financial Measures

Equinix provides all information required in accordance with generally accepted accounting principles ("GAAP"), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Equinix uses non-GAAP financial measures to evaluate its operations.

Equinix provides normalized and constant currency growth rates, which are calculated to adjust for acquisitions, dispositions, integration costs, changes in accounting principles and foreign currency.

Equinix presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA represents income from operations excluding depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales.

In presenting non-GAAP financial measures, such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), adjusted EBITDA margins, free cash flow and adjusted free cash flow, Equinix excludes certain items that it believes are not good indicators of Equinix's current or future operating performance. These items are depreciation, amortization, accretion of asset retirement obligations and accrued restructuring charges, stock-based compensation, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales. Equinix excludes these items in order for its lenders, investors and the industry analysts who review and report on Equinix to better evaluate Equinix's operating performance and cash spending levels relative to its industry sector and competitors.

Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of an IBX data center, and do not reflect its current or future cash spending levels to support its business. Its IBX data centers are long-lived assets, and have an economic life greater than 10 years. The construction costs of an IBX data center do not recur with respect to such data center, although Equinix may incur initial construction costs in future periods with respect to additional IBX data centers, and future capital expenditures remain minor relative to the initial investment. This is a trend it expects to continue. In addition, depreciation is also based on the estimated useful lives of the IBX data centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX data centers and are not indicative of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations.

In addition, in presenting the non-GAAP financial measures, Equinix also excludes amortization expense related to acquired intangible assets. Amortization expense is significantly affected by the timing and magnitude of acquisitions and these charges may vary in amount from period to period. We exclude amortization expense to facilitate a more meaningful evaluation of our current operating performance and comparisons to our prior periods. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charges, as these expenses represent costs which Equinix also believes are not meaningful in evaluating Equinix's current operations. Equinix excludes stock-based compensation expense, as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, Equinix and many investors and analysts exclude stock-based compensation expense to compare its operating results with those of other companies. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to Equinix's decision to exit leases for excess space adjacent to several of its IBX data centers, which it did not intend to build out, or its decision to reverse such restructuring charges. Equinix also excludes impairment charges 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 gain or loss on asset sales as it represents profit or loss that is not meaningful in evaluating the current or future operating performance. Finally, Equinix excludes transaction costs from its non-GAAP financial measures to allow more comparable comparisons of the financial results to the historical operations. The transaction costs relate to costs Equinix incurs in connection with business combinations and formation of joint ventures, including advisory, legal, accounting, valuation and other professional or consulting fees. Such charges generally are not relevant to assessing the long-term performance of Equinix. In addition, the frequency and amount of such charges vary significantly based on the size and timing of the transactions. Management believes items such as restructuring charges, impairment charges, transaction costs and gain or loss on asset sales are non-core transactions; however, these types of costs may occur in future periods.

Equinix also presents funds from operations ("FFO") and adjusted funds from operations ("AFFO"), both commonly used in the REIT industry, as supplemental performance measures. Additionally, Equinix presents AFFO per share, which is also commonly used in the REIT industry. AFFO per share offers investors and industry analysts a perspective of Equinix's underlying operating performance when compared to other REIT companies. FFO is calculated in accordance with the definition established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income or loss, excluding gain or loss from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. AFFO represents FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, gain or loss on debt extinguishment, an income tax expense adjustment, recurring capital expenditures, net income or loss from discontinued operations, net of tax and adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items. Equinix excludes depreciation expense, amortization expense, accretion, stock-based compensation, restructuring charges, impairment charges and transaction costs for the same reasons that they are excluded from the other non-GAAP financial measures mentioned above.

Equinix includes an adjustment for revenues from installation fees, since installation fees are deferred and recognized ratably over the period of contract term, although the fees are generally paid in a lump sum upon installation. Equinix includes an adjustment for straight-line rent expense on its operating leases, since the total minimum lease payments are recognized ratably over the lease term, although the lease payments generally increase over the lease term. Equinix also includes an adjustment to contract costs incurred to obtain contracts, since contract costs are capitalized and amortized over the estimated period of benefit on a straight-line basis, although costs of obtaining contracts are generally incurred and paid during the period of obtaining the contracts. The adjustments for installation revenues, straight-line rent expense and contract costs are intended to isolate the cash activity included within the straight-lined or amortized results in the consolidated statement of operations. Equinix excludes the amortization of deferred financing costs and debt discounts and premiums as these expenses relate to the initial costs incurred in connection with its debt financings that have no current or future cash obligations. Equinix excludes gain or loss on debt extinguishment since it represents a cost that is not a good indicator of Equinix's current or future operating performance. Equinix includes an income tax expense adjustment, which represents the non-cash tax impact due to changes in valuation allowances and uncertain tax positions that do not relate to the current period's operations. Equinix excludes recurring capital expenditures, which represent expenditures to extend the useful life of its IBX data centers or other assets that are required to support current revenues. Equinix also excludes net income or loss from discontinued operations, net of tax, which represents results that are not a good indicator of our current or future operating performance.

Equinix presents constant currency results of operations, which is a non-GAAP financial measure and is not meant to be considered in isolation or as an alternative to GAAP results of operations. However, Equinix has presented this non-GAAP financial measure to provide investors with an additional tool to evaluate its operating results without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Equinix's business performance. To present this information, Equinix's current and comparative prior period revenues and certain operating expenses from entities with functional currencies other than the U.S. dollar are converted into U.S. dollars at a consistent exchange rate for purposes of each result being compared.

Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP. Non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Equinix presents such non-GAAP financial measures to provide investors with an additional tool to evaluate its operating results in a manner that focuses on what management believes to be its core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods. Equinix believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze Equinix effectively.

Investors should note that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as those of other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by us to similarly titled non-GAAP financial measures of other companies. Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, net income or loss from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data without unreasonable effort. The impact of such adjustments could be significant. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, risks to our business and operating results related to the COVID-19 pandemic; the challenges of acquiring, operating and constructing IBX data centers and developing, deploying and delivering Equinix products and solutions; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenues from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; risks related to our taxation as a REIT and other risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent and upcoming Equinix quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.



EQUINIX, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



Three Months Ended Twelve Months Ended

December 31,September 30,December 31,December 31,December 31, 2020 2020 2019 2020 2019

Recurring $1,466,126$ 1,432,072$1,337,977$5,658,030$5,238,186revenues

Non-recurring 97,989 87,695 79,158 340,515 323,954 revenues

Revenues 1,564,115 1,519,767 1,417,135 5,998,545 5,562,140

Cost of 830,735 767,979 725,636 3,074,340 2,810,184 revenues

Gross profit 733,380 751,788 691,499 2,924,205 2,751,956

Operating expenses:

Sales and 187,055 172,727 160,556 718,356 651,046 marketing

General and 293,144 279,350 245,504 1,090,981 935,018 administrative

Transaction 24,948 5,840 16,545 55,935 24,781 costs

Impairment - 7,306 (233) 7,306 15,790 charges

Gain on asset (373) (1,785) (43,847) (1,301) (44,310) sales

Total operating504,774 463,438 378,525 1,871,277 1,582,325 expenses

Income from 228,606 288,350 312,974 1,052,928 1,169,631 operations

Interest and other income (expense):

Interest income1,244 1,452 7,532 8,654 27,697

Interest (90,912) (99,736) (117,617) (406,466) (479,684) expense

Other income (2,697) 162 12,336 6,913 27,778 (expense)

Loss on debt (44,001) (93,494) (52,758) (145,804) (52,825) extinguishment

Total interest (136,366) (191,616) (150,507) (536,703) (477,034) and other, net

Income before 92,240 96,734 162,467 516,225 692,597 income taxes

Income tax (41,304) (29,903) (37,632) (146,151) (185,352) expense

Net income 50,936 66,831 124,835 370,074 507,245

Net (income) loss attributable to58 (144) 160 (297) 205 non-controlling interests

Net income attributable to$50,994 $ 66,687 $124,995 $369,777 $507,450 Equinix

Net income per share attributable to Equinix:

Basic net income per $0.57 $ 0.75 $1.47 $4.22 $6.03 share

Diluted net income per $0.57 $ 0.74 $1.46 $4.18 $5.99 share

Shares used in computing basic89,113 88,806 85,289 87,700 84,140 net income per share

Shares used in computing diluted net 89,726 89,519 85,831 88,410 84,679 income per share







EQUINIX, INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



Three Months Ended Twelve Months Ended

December 31,September 30,December 31,December 31,December 31, 2020 2020 2019 2020 2019

Net income $50,936 $66,831 $124,835 $370,074 $507,245

Other comprehensive income (loss), net of tax:

Foreign currency translation 481,625 299,441 283,185 548,560 (58,334) adjustment ("CTA") gain (loss)

Unrealized loss on cash flow (27,824) (33,842) (22,928) (82,790) (3,842) hedges

Net investment hedge CTA gain (265,340) (227,101) (154,596) (444,553) 73,294 (loss)

Net actuarial gain (loss) on 8 22 (22) 85 (48) defined benefit plans

Total other comprehensive 188,469 38,520 105,639 21,302 11,070 income, net of tax

Comprehensive income, net of 239,405 105,351 230,474 391,376 518,315 tax

Net (income) loss attributable to58 (144) 160 (297) 205 non-controlling interests

Other comprehensive (income) loss (36) (30) (16) (57) 19 attributable to non-controlling interests

Comprehensive income $239,427 $105,177 $230,618 $391,022 $518,539 attributable to Equinix







EQUINIX, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



December 31, 2020December 31, 2019

Assets

Cash and cash equivalents $1,604,869 $1,869,577

Short-term investments 4,532 10,362

Accounts receivable, net 676,738 689,134

Other current assets 355,016 303,543

Total current assets 2,641,155 2,872,616

Property, plant and equipment, net 14,503,084 12,152,597

Operating lease right-of-use assets 1,475,057 1,475,367

Goodwill 5,472,553 4,781,858

Intangible assets, net 2,170,945 2,102,389

Other assets 776,047 580,788

Total assets $27,038,841 $23,965,615

Liabilities and Stockholders' Equity

Accounts payable and accrued expenses $876,862 $760,718

Accrued property, plant and equipment 301,155 301,535

Current portion of operating lease 154,207 145,606 liabilities

Current portion of finance lease 137,683 75,239 liabilities

Current portion of mortgage and loans 82,289 77,603 payable

Current portion of senior notes 150,186 643,224

Other current liabilities 354,368 153,938

Total current liabilities 2,056,750 2,157,863

Operating lease liabilities, less 1,308,627 1,315,656 current portion

Finance lease liabilities, less current 1,784,816 1,430,882 portion

Mortgage and loans payable, less current1,287,254 1,289,434 portion

Senior notes, less current portion 9,018,277 8,309,673

Other liabilities 948,999 621,725

Total liabilities 16,404,723 15,125,233

Common stock 89 86

Additional paid-in capital 15,028,357 12,696,433

Treasury stock (122,118) (144,256)

Accumulated dividends (5,119,274) (4,168,469)

Accumulated other comprehensive loss (913,368) (934,613)

Retained earnings 1,760,302 1,391,425

Total Equinix stockholders' equity 10,633,988 8,840,606

Non-controlling interests 130 (224)

Total stockholders' equity 10,634,118 8,840,382

Total liabilities and stockholders' $27,038,841 $23,965,615 equity





Ending headcount by geographic region is as follows:

Americas headcount 4,599 3,672

EMEA headcount 3,405 2,941

Asia-Pacific headcount 2,009 1,765

Total headcount 10,013 8,378







EQUINIX, INC.

Summary of Debt Principal Outstanding

(in thousands)

(unaudited)



December 31, 2020December 31, 2019



Finance lease liabilities $1,922,499 $1,506,121



Term loans 1,288,779 1,282,302

Mortgage payable and other loans payable80,764 84,735

Plus: debt discount and issuance costs, 1,427 3,081 net

Total mortgage and loans payable 1,370,970 1,370,118 principal



Senior notes 9,168,463 8,952,897

Plus: debt issuance costs 92,773 78,030

Less: debt premium (186) (1,716)

Total senior notes principal 9,261,050 9,029,211



Total debt principal outstanding $12,554,519 $11,905,450







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, 2020 2020 2019 2020 2019



Cash flows from operating activities:

Net income $50,936 $66,831 $124,835 $370,074 $507,245

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization 378,859 362,286 328,295 1,427,010 1,285,296 and accretion

Stock-based 79,361 75,248 62,126 294,952 236,539 compensation

Amortization of debt issuance costs3,951 3,884 3,613 15,739 13,042 and debt discounts and premiums

Loss on debt 44,001 93,494 52,758 145,804 52,825 extinguishment

Gain on asset (373) (1,785) (43,847) (1,301) (44,310) sales

Impairment - 7,306 (233) 7,306 15,790 charges

Other items (158) (2,518) 3,831 18,071 19,620

Changes in operating assets and liabilities:

Accounts 63,516 (23,871) 96,480 25,412 (26,909) receivable

Income taxes, (2,448) (32,054) (40,649) (22,641) 32,495 net

Accounts payable and 21,955 61,410 (34,588) 57,801 (27,928) accrued expenses

Operating lease 39,039 38,319 40,805 153,650 149,031 right-of-use assets

Operating lease (35,472) (35,300) (40,032) (142,863) (152,091) liabilities

Other assets and 42,981 (81,088) (23,724) (39,188) (67,917) liabilities

Net cash provided by operating 686,148 532,162 529,670 2,309,826 1,992,728 activities

Cash flows from investing activities:

Purchases, sales and maturities of (62,099) 3,969 (5,776) (98,411) (20,523) investments, net

Business acquisitions, net of cash (702,024) - - (1,180,272) (34,143) and restricted cash acquired

Purchases of (75,720) (41,895) (104,865) (200,182) (169,153) real estate

Purchases of other property, (834,330) (565,285) (714,561) (2,282,504) (2,079,521) plant and equipment

Proceeds from 334,397 - 358,656 334,397 358,773 asset sales

Net cash used in investing (1,339,776)(603,211) (466,546) (3,426,972) (1,944,567)activities



Cash flows from financing activities:

Proceeds from employee - 31,727 - 62,118 52,018 equity awards

Payment of dividend (237,756) (240,690) (210,360) (947,933) (836,164) distributions

Proceeds from public offering of - 196,477 - 1,981,375 1,660,976 common stock, net of offering costs

Proceeds from - - - 750,790 - loans payable

Proceeds from senior notes, 1,845,891 - 2,797,906 4,431,627 2,797,906 net of debt discounts

Repayment of finance lease (40,842) (31,765) (63,701) (115,288) (126,486) liabilities

Repayment of mortgage and (20,857) (19,431) (19,431) (829,466) (73,227) loans payable

Repayment of (1,923,000)(1,947,050) (2,056,289)(4,363,761) (2,206,289) senior notes

Debt extinguishment(29,296) (77,785) (43,311) (111,700) (43,311) costs

Debt issuance (15,970) - (23,341) (42,236) (23,341) costs

Other financing - - - - - activities

Net cash provided by (used in) (421,830) (2,088,517) 381,473 815,526 1,202,082 financing activities

Effect of foreign currency exchange rates on cash, 35,065 18,513 21,883 40,702 8,766 cash equivalents and restricted cash

Net increase (decrease) in cash, cash (1,040,393)(2,141,053) 466,480 (260,918) 1,259,009 equivalents and restricted cash

Cash, cash equivalents and restricted cash at2,666,088 4,807,141 1,420,133 1,886,613 627,604 beginning of period

Cash, cash equivalents and $1,625,695$2,666,088 $1,886,613$1,625,695 $1,886,613restricted cash at end of period

Supplemental cash flow information:

Cash paid for $27,385 $55,473 $47,507 $143,934 $136,583 taxes

Cash paid for $132,034 $115,174 $141,140 $498,408 $553,815 interest



Free cash flow (negative free $(591,529)$(75,018) $68,900 $(1,018,735)$68,684 cash flow) ^(1)



Adjusted free cash flow (adjusted $186,215 $(33,123) $173,765 $361,719 $271,980 negative free cash flow) ^(2)





We define free cash flow (negative free cash flow) as net cash provided by (1)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 $686,148 $532,162 $529,670 $2,309,826 $1,992,728 activities as presented above

Net cash used in investing activities as (1,339,776)(603,211) (466,546) (3,426,972) (1,944,567) presented above

Purchases, sales and maturities of 62,099 (3,969) 5,776 98,411 20,523 investments, net

Free cash flow (negative free$(591,529)$(75,018) $68,900 $(1,018,735)$68,684 cash flow)



We define adjusted free cash flow (adjusted negative free cash flow) as free (2)cash flow (negative free cash flow) as defined above, excluding any purchases of real estate and business acquisitions, net of cash and restricted cash acquired as presented below:

Free cash flow (negative free$(591,529)$(75,018) $68,900 $(1,018,735)$68,684 cash flow) as defined above)

Less business acquisitions, net of cash 702,024 - - 1,180,272 34,143 and restricted cash acquired

Less purchases75,720 41,895 104,865 200,182 169,153 of real estate

Adjusted free cash flow (adjusted $186,215 $(33,123) $173,765 $361,719 $271,980 negative free cash flow)







EQUINIX, INC.

Non-GAAP Measures and Other Supplemental Data

(in thousands)

(unaudited)



Three Months Ended Twelve Months Ended

December September December December December 31, 30, 31, 31, 31, 2020 2020 2019 2020 2019

Recurring $1,466,126$1,432,072$1,337,977$5,658,030$5,238,186 revenues

Non-recurring 97,989 87,695 79,158 340,515 323,954 revenues

Revenues ^(1) 1,564,115 1,519,767 1,417,135 5,998,545 5,562,140



Cash cost of 539,667 494,187 477,144 1,991,341 1,851,458 revenues ^(2)

Cash gross 1,024,448 1,025,580 939,991 4,007,204 3,710,682 profit ^(3)



Cash operating expenses ^(4) (7):

Cash sales and marketing 119,805 106,317 100,430 452,800 401,877 expenses ^(5)

Cash general and administrative 193,241 182,018 163,701 701,506 621,078 expenses ^ (6)

Total cash operating 313,046 288,335 264,131 1,154,306 1,022,955 expenses ^(4)(7)



Adjusted EBITDA $711,402 $737,245 $675,860 $2,852,898$2,687,727 ^(8)



Cash gross 65% 67% 66% 67% 67% margins ^(9)



Adjusted EBITDA 45% 49% 48% 48% 48% margins ^ (10)



Adjusted EBITDA flow-through (58)% 35% 6% 38% 56% rate ^(11)



FFO ^(12) $301,747 $298,183 $304,025 $1,300,630$1,314,556



AFFO ^(13) (14) $516,965 $579,682 $472,611 $2,189,145$1,931,122



Basic FFO per $3.39 $3.36 $3.56 $14.83 $15.62 share ^(15)



Diluted FFO per $3.36 $3.33 $3.54 $14.71 $15.52 share ^(15)



Basic AFFO per $5.80 $6.53 $5.54 $24.96 $22.95 share ^(15)



Diluted AFFO per$5.76 $6.48 $5.51 $24.76 $22.81 share^(15)





(1) The geographic split of our revenues on a services basis is presented below:



Americas Revenues:



Colocation $472,227 $450,030 $443,991 $1,820,709$1,769,654

Interconnection 161,334 156,677 149,474 622,327 576,709

Managed 36,787 28,954 21,485 120,159 90,262 infrastructure

Other 5,393 3,911 5,020 19,605 19,743

Recurring 675,741 639,572 619,970 2,582,800 2,456,368 revenues

Non-recurring 36,361 32,760 33,696 124,958 131,359 revenues

Revenues $712,102 $672,332 $653,666 $2,707,758$2,587,727





EMEA Revenues:



Colocation $369,523 $391,773 $359,423 $1,504,770$1,395,544

Interconnection 58,345 55,700 44,350 213,490 161,552

Managed 37,883 30,690 28,495 127,722 113,631 infrastructure

Other 4,561 5,581 3,458 18,738 10,019

Recurring 470,312 483,744 435,726 1,864,720 1,680,746 revenues

Non-recurring 40,995 34,339 28,063 131,669 125,698 revenues

Revenues $511,307 $518,083 $463,789 $1,996,389$1,806,444



Asia-Pacific Revenues:



Colocation $246,864 $236,762 $219,306 $933,522 $857,009

Interconnection 51,065 48,565 41,180 187,441 155,328

Managed 22,876 22,614 21,795 89,464 88,735 infrastructure

Other (732) 815 - 83 -

Recurring 320,073 308,756 282,281 1,210,510 1,101,072 revenues

Non-recurring 20,633 20,596 17,399 83,888 66,897 revenues

Revenues $340,706 $329,352 $299,680 $1,294,398$1,167,969



Worldwide Revenues:



Colocation $1,088,614$1,078,565$1,022,720$4,259,001$4,022,207

Interconnection 270,744 260,942 235,004 1,023,258 893,589

Managed 97,546 82,258 71,775 337,345 292,628 infrastructure

Other 9,222 10,307 8,478 38,426 29,762

Recurring 1,466,126 1,432,072 1,337,977 5,658,030 5,238,186 revenues

Non-recurring 97,989 87,695 79,158 340,515 323,954 revenues

Revenues $1,564,115$1,519,767$1,417,135$5,998,545$5,562,140





(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$830,735 $767,979 $725,636 $3,074,340$2,810,184

Depreciation, amortization and(283,029) (265,936) (241,753) (1,050,106)(933,371) accretion expense

Stock-based compensation (8,039) (7,856) (6,739) (32,893) (25,355) expense

Cash cost of $539,667 $494,187 $477,144 $1,991,341$1,851,458 revenues



The geographic split of our cash cost of revenues is presented below:



Americas cash $217,170 $196,731 $184,029 $793,601 $729,100 cost of revenues

EMEA cash cost 199,827 189,423 187,972 754,056 720,890 of revenues

Asia-Pacific cash cost of 122,670 108,033 105,143 443,684 401,468 revenues

Cash cost of $539,667 $494,187 $477,144 $1,991,341$1,851,458 revenues



(3) We define cash gross profit as revenues less cash cost of revenues (as defined above).



We define cash operating expense as selling, general, and administrative (4) expense less depreciation, amortization, and stock-based compensation. We also refer to cash operating expense as cash selling, general and administrative expense or "cash SG&A".



Selling, general, and $480,199 $452,077 $406,060 $1,809,337$1,586,064 administrative expense

Depreciation and amortization (95,830) (96,350) (86,542) (376,904) (351,925) expense

Stock-based compensation (71,323) (67,392) (55,387) (278,127) (211,184) expense

Cash operating $313,046 $288,335 $264,131 $1,154,306$1,022,955 expense



(5) We define cash sales and marketing expense as sales and marketing expense less depreciation, amortization and stock-based compensation as presented below:



Sales and marketing $187,055 $172,727 $160,556 $718,356 $651,046 expense

Depreciation and amortization (48,745) (48,780) (47,659) (192,661) (192,450) expense

Stock-based compensation (18,505) (17,630) (12,467) (72,895) (56,719) expense

Cash sales and marketing $119,805 $106,317 $100,430 $452,800 $401,877 expense







We define cash general and administrative expense as general and administrative (6) expense less depreciation, amortization and stock-based compensation as presented below:



General and administrative $293,144 $279,350 $245,504 $1,090,981$935,018 expense

Depreciation and amortization (47,085) (47,570) (38,883) (184,243) (159,475) expense

Stock-based compensation (52,818) (49,762) (42,920) (205,232) (154,465) expense

Cash general and administrative $193,241 $182,018 $163,701 $701,506 $621,078 expense



(7) The geographic split of our cash operating expense, or cash SG&A, as defined above, is presented below:



Americas cash SG$195,180 $185,051 $155,561 $728,135 $621,005 &A

EMEA cash SG&A 74,205 65,444 69,072 268,087 257,574

Asia-Pacific 43,661 37,840 39,498 158,084 144,376 cash SG&A

Cash SG&A $313,046 $288,335 $264,131 $1,154,306$1,022,955



We define adjusted EBITDA as income from operations excluding depreciation, (8) amortization, accretion, stock-based compensation, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales as presented below:



Income from $228,606 $288,350 $312,974 $1,052,928$1,169,631 operations

Depreciation, amortization and378,859 362,286 328,295 1,427,010 1,285,296 accretion expense

Stock-based compensation 79,362 75,248 62,126 311,020 236,539 expense

Impairment - 7,306 (233) 7,306 15,790 charges

Transaction 24,948 5,840 16,545 55,935 24,781 costs

Gain on asset (373) (1,785) (43,847) (1,301) (44,310) sales

Adjusted EBITDA $711,402 $737,245 $675,860 $2,852,898$2,687,727



The geographic split of our adjusted EBITDA is presented below:



Americas income $22,066 $50,657 $136,236 $178,454 $413,936 from operations

Americas depreciation, amortization and195,437 182,899 165,580 731,979 668,727 accretion expense

Americas stock-based 59,956 55,044 44,878 234,015 170,102 compensation expense

Americas impairment - - (233) - 15,790 charges

Americas transaction 23,634 3,735 13,378 43,922 14,830 costs

Americas gain on(1,341) (1,785) (45,763) (2,348) (45,763) asset sales

Americas $299,752 $290,550 $314,076 $1,186,022$1,237,622 adjusted EBITDA



EMEA income from$118,380 $148,992 $96,453 $531,530 $421,786 operations

EMEA depreciation, amortization and103,067 101,265 95,264 390,025 354,930 accretion expense

EMEA stock-based compensation 12,139 12,770 10,788 48,151 40,796 expense

EMEA transaction718 189 2,324 1,490 9,015 costs

EMEA loss on 2,971 - 1,916 3,050 1,453 asset sales

EMEA adjusted $237,275 $263,216 $206,745 $974,246 $827,980 EBITDA



Asia-Pacific income from $88,160 $88,701 $80,285 $342,944 $333,909 operations

Asia-Pacific depreciation, amortization and80,355 78,122 67,451 305,006 261,639 accretion expense

Asia-Pacific stock-based 7,267 7,434 6,460 28,854 25,641 compensation expense

Asia-Pacific impairment - 7,306 - 7,306 - charges

Asia-Pacific transaction 596 1,916 843 10,523 936 costs

Asia-Pacific gain on asset (2,003) - - (2,003) - sales

Asia-Pacific $174,375 $183,479 $155,039 $692,630 $622,125 adjusted EBITDA



(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 70 % 71 % 72 % 71 % 72 % gross margins

EMEA cash gross 61 % 63 % 59 % 62 % 60 % margins

Asia-Pacific cash gross 64 % 67 % 65 % 66 % 66 % margins



(10)We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.



Americas adjusted EBITDA 42 % 43 % 48 % 44 % 48 % margins

EMEA adjusted 46 % 51 % 45 % 49 % 46 % EBITDA margins

Asia-Pacific adjusted EBITDA 51 % 56 % 52 % 54 % 53 % margins



(11)We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as follows:



Adjusted EBITDA $711,402 $737,245 $675,860 $2,852,898$2,687,727 - current period

Less adjusted EBITDA - prior (737,245) (720,041) (674,702) (2,687,727)(2,413,240) period

Adjusted EBITDA $(25,843) $17,204 $1,158 $165,171 $274,487 growth



Revenues - $1,564,115$1,519,767$1,417,135$5,998,545$5,562,140 current period

Less revenues - (1,519,767)(1,470,121)(1,396,810)(5,562,140)(5,071,654) prior period

Revenue growth $44,348 $49,646 $20,325 $436,405 $490,486



Adjusted EBITDA flow-through (58) % 35 % 6 % 38 % 56 % rate



FFO is defined as net income or loss, excluding gain or loss from the (12)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 $50,936 $66,831 $124,835 $370,074 $507,245

Net loss attributable to 58 (144) 160 (297) 205 non-controlling interests

Net income attributable to 50,994 66,687 124,995 369,777 507,450 Equinix

Adjustments:

Real estate 247,554 232,110 221,143 924,064 845,798 depreciation

(Gain) loss on disposition of 2,494 (1,313) (42,758) 4,063 (39,337) real estate property

Adjustments for FFO from 705 699 645 2,726 645 unconsolidated joint ventures

FFO attributable to common $301,747 $298,183 $304,025 $1,300,630$1,314,556 shareholders



AFFO is defined as FFO, excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, transaction costs, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost (13)adjustment, amortization of deferred financing costs and debt discounts and premiums, gain or loss on debt extinguishment, an income tax expense adjustment, net income or loss from discontinued operations, net of tax, recurring capital expenditures and adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items.

FFO attributable to common $301,747 $298,183 $304,025 $1,300,630$1,314,556 shareholders

Adjustments:

Installation revenue 3,504 (3,797) 2,751 (125) 11,031 adjustment

Straight-line rent expense 3,567 3,019 773 10,787 8,167 adjustment

Amortization of deferred financing costs 3,951 3,884 3,613 15,739 13,042 and debt discounts and premiums

Contract cost (12,823) (7,111) (11,556) (35,675) (40,861) adjustment

Stock-based compensation 79,362 75,248 62,126 311,020 236,539 expense

Non-real estate depreciation 79,693 78,356 60,712 300,258 242,761 expense

Amortization 50,972 50,222 48,689 199,047 196,278 expense

Accretion expense 640 1,598 (2,249) 3,641 459 (adjustment)

Recurring capital (74,446) (38,327) (80,925) (160,637) (186,002) expenditures

Loss on debt 44,001 93,494 52,758 145,804 52,825 extinguishment

Transaction 24,948 5,840 16,545 55,935 24,781 costs

Impairment - 7,306 (233) 7,306 15,790 charges

Income tax expense 10,837 11,480 13,502 33,220 39,676 adjustment

Adjustments for AFFO from 1,012 287 2,080 2,195 2,080 unconsolidated joint ventures

AFFO attributable to $516,965 $579,682 $472,611 $2,189,145$1,931,122 common shareholders



(14) Following is how we reconcile from adjusted EBITDA to AFFO:



Adjusted EBITDA $711,402 $737,245 $675,860 $2,852,898$2,687,727

Adjustments:

Interest expense, net of (89,668) (98,284) (110,085) (397,812) (451,987) interest income

Amortization of deferred financing costs 3,951 3,884 3,613 15,739 13,042 and debt discounts and premiums

Income tax (41,304) (29,903) (37,632) (146,151) (185,352) expense

Income tax expense 10,837 11,480 13,502 33,220 39,676 adjustment

Straight-line rent expense 3,567 3,019 773 10,787 8,167 adjustment

Contract cost (12,823) (7,111) (11,556) (35,675) (40,861) adjustment

Installation revenue 3,504 (3,797) 2,751 (125) 11,031 adjustment

Recurring capital (74,446) (38,327) (80,925) (160,637) (186,002) expenditures

Other income (2,697) 162 12,336 6,913 27,778

(Gain) loss on disposition of 2,494 (1,313) (42,758) 4,063 (39,337) real estate property

Adjustments for unconsolidated JVs' and 1,775 842 2,885 4,624 2,930 non-controlling interests

Adjustment for gain on sale of 373 1,785 43,847 1,301 44,310 asset

AFFO attributable to $516,965 $579,682 $472,611 $2,189,145$1,931,122 common shareholders



(15)The shares used in the computation of basic and diluted FFO and AFFO per share attributable to Equinix is presented below:



Shares used in computing basic net income per 89,113 88,806 85,289 87,700 84,140 share, FFO per share and AFFO per share

Effect of dilutive securities:

Employee equity 613 713 542 710 539 awards

Shares used in computing diluted net income per 89,726 89,519 85,831 88,410 84,679 share, FFO per share and AFFO per share



Basic FFO per $3.39 $3.36 $3.56 $14.83 $15.62 share

Diluted FFO per $3.36 $3.33 $3.54 $14.71 $15.52 share



Basic AFFO per $5.80 $6.53 $5.54 $24.96 $22.95 share

Diluted AFFO per$5.76 $6.48 $5.51 $24.76 $22.81 share



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SOURCE Equinix, Inc.