Exhibit 99.1
Equinix Reports Earnings for Third Quarter 2003; Company
Achieves First Full Quarter of Positive Operating Cash Flow
FOSTER CITY, Calif.--(BUSINESS WIRE)--Oct. 27, 2003--
-- Increases revenues by 53% over same quarter 2002
-- Increases customer base to more than 650, adding 60 new
customers including Amazon.com, Apple Computer, Comcast IP
Services, Deutsche Boerse AG and Macromedia
-- Announces planned expansion of Silicon Valley presence with
addition of Sprint data center in Santa Clara, California
Equinix, Inc. (Nasdaq:EQIX), the leading provider of
network-neutral data centers and Internet exchange services, today
reported its quarterly results for the period ended September 30,
2003.
Revenues were $30.9 million for the quarter ended September 30,
2003 representing a 53% increase over the same quarter in the prior
year and a 9% increase over second quarter of 2003. Recurring
revenues, consisting of colocation, interconnection and managed
services were $28.4 million, a 78% increase over the same quarter last
year and a 9% increase over second quarter 2003. Non-recurring
revenues were $2.5 million, consisting of $2.0 million of professional
services and installation fees, and $534,000 of customer settlements.
Cost of revenues, excluding non-cash depreciation, amortization,
accretion and stock-based compensation, were $19.7 million for the
third quarter, a 13% increase over the previous quarter. The majority
of this increase was related to tax accruals for IBX property tax
obligations. Selling, general and administrative expenses, excluding
non-cash depreciation, amortization and stock-based compensation, were
$9.8 million for the third quarter, an 8% decrease from the second
quarter 2003. This decrease is a result of continued cost savings from
the consolidation of the Asia-Pacific assets acquired at the end of
2002. Net loss for the third quarter was $19.7 million, or a basic and
diluted net loss per share of $2.12.
The company was operating cash flow positive for the third
quarter. Cash generated in operations for the quarter was $1.9
million, as compared to a loss of $2.7 million in the previous
quarter. Cash flow used in investing activities was $1.4 million
primarily comprised of capital expenditures. Cash generated from
financing activities was $432,000. As of September 30, 2003, the
company's cash balance was $25.2 million, a $1.0 million increase over
second quarter 2003.
Equinix added 60 new customers in the third quarter including
Amazon.com, Apple Computer, Comcast IP Services, Deutsche Boerse AG,
GTSI, Keynote Systems, KVH Telecom, Macromedia, SAIC, Savvis and
Standard Bank Asia Limited. The company received additional orders in
the quarter from greater than 45% of its existing U.S. customers
including EDS, IBM, Microsoft and the U.S. Government. The company
ended the quarter with greater than 650 customers.
"Our revenue growth, quality of new customer additions, and most
importantly, the arrival of a positive operating cash flow position
for all of the third quarter clearly affirms the company's position at
an important inflection point," said Peter Van Camp, CEO of Equinix.
"It is exciting to be in this position of strength as this market
consolidates, particularly with opportunities such as the Sprint Santa
Clara center."
Recent Company Developments
-- Equinix announced today that it has entered into definitive
agreements to expand its footprint with the addition of the
Sprint data center in Santa Clara, California, which currently
hosts the web operations of some of the top names in Internet
e-commerce. The addition of the 15th IBX center expands the
global Equinix footprint to over 1.2 million square feet. The
transaction is expected to close on December 1, 2003.
-- U.S. interconnection services revenue increased by 17% over
second quarter 2003 and grew to 22% of total U.S. recurring
revenues for the quarter while total interconnection services
revenue improved to 19% of total recurring revenues. Customer
cross-connects grew to 6,011, a 14% increase over the prior
quarter and a 119% increase over same quarter last year. Ports
on the Equinix GigE Exchange were reported at 239, a 12%
increase over the second quarter 2003 and a 112% increase over
the same quarter last year.
Business Outlook
For the fourth quarter 2003, the company expects revenue to be in
the range of $32.0 to $33.0 million. Cash generated in operations will
be approximately $1.0 million. This includes $2.0 million of
additional cash interest paid for the company's semi-annual interest
obligation to its bondholders over the third quarter. Cash used in
investing activities, consisting primarily of capital expenditures,
will be approximately $4.0 million, including capital expenditures to
support a significant customer deployment in Singapore. This excludes
any non-cash expenditures related to the Sprint Santa Clara data
center. Cash flow used in financing activities will be approximately
$1.0 million.
Full year revenues for 2003 are projected to be in the range of
$116.5 to $117.5 million and cash used in operating activities will be
less than $20.0 million. Total cash as of December 31, 2003 is
expected to be greater than $20.0 million.
For 2004, total revenues are expected to be in the range of $150
to $162 million. Cash gross margins are expected to be in the range of
45-50%. Selling, general and administrative expenses, excluding
non-cash depreciation, amortization and stock-based compensation are
expected to increase 3-5%.
The company will discuss its results and guidance on its quarterly
conference call on Monday, Oct. 27, 2003, at 5:30 p.m. Eastern Time
(2:30 p.m. Pacific Time). To hear the conference call, please dial
1-484-630-5144 (domestic and international) at 5:20 p.m. (ET) and
reference the passcode (EQIX). A simultaneous live Webcast of the call
will be available over the Internet at www.equinix.com, under the
Investor Relations heading.
About Equinix
Equinix is the leading global provider of network-neutral data
centers and Internet exchange services for enterprises, content
companies, systems integrators and network services providers. Through
the company's 14 Internet Business Exchange(TM) (IBX(R)) centers in
five countries, customers can directly interconnect with every major
global network and ISP for their critical peering, transit and traffic
exchange requirements. These interconnection points facilitate the
highest performance and growth of the Internet by serving as neutral
and open marketplaces for Internet infrastructure services, allowing
customers to expand their businesses while reducing costs.
Equinix and IBX are registered trademarks of Equinix, Inc.
Internet Business Exchange is a trademark of Equinix, Inc.
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 operating IBX centers and developing, deploying
and delivering Equinix services; a failure of the transaction with
Sprint to close or to receive significant revenue from Sprint's
existing customers in the center; competition from existing and new
competitors; the ability to generate sufficient cash flow or otherwise
obtain funds to repay 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, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share detail)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
----------- --------- --------- ---------
(unaudited)
Revenues (1) $30,919 $20,187 $84,788 $58,385
Cost of revenues 33,314 26,217 95,567 78,599
----------- --------- --------- ---------
Gross profit (loss) (2,395) (6,030) (10,779) (20,214)
----------- --------- --------- ---------
Operating expenses:
Sales and marketing 4,823 2,888 14,210 12,168
General and administrative 7,068 8,159 26,350 22,735
Restructuring charges - 19,010 - 28,960
----------- --------- --------- ---------
Total operating expenses 11,891 30,057 40,560 63,863
----------- --------- --------- ---------
Loss from operations (2) (14,286) (36,087) (51,339) (84,077)
----------- --------- --------- ---------
Interest and other income
(expense):
Interest income 46 179 182 961
Interest expense and other (5,478) (8,180) (15,317) (26,411)
Gain on debt
extinguishments - - - 27,188
----------- --------- --------- ---------
Total interest
and other, net (5,432) (8,001) (15,135) 1,738
----------- --------- --------- ---------
Net loss $(19,718) $(44,088) $(66,474) $(82,339)
=========== ========= ========= =========
Basic and diluted net loss
per share $(2.12) $(14.04) $(7.52) $(28.12)
=========== ========= ========= =========
Shares used in computing
basic and diluted
net loss per share 9,293 3,141 8,837 2,928
=========== ========= ========= =========
- -----------------------------
(1) Revenues include contract settlements of $534,000 and $2,959,000
for the three months ended September 30, 2003 and 2002,
respectively, and $1,744,000 and $4,787,000 for the nine months
ended September 30, 2003 and 2002, respectively.
(2) Loss from operations includes the following non-cash expenses:
Depreciation, amortization
and accretion expense:
Cost of revenues $13,640 $12,217 $41,343 $35,068
Sales and marketing 518 - 1,562 -
General and
administrative 1,016 1,863 4,869 4,431
----------- --------- --------- ---------
15,174 14,080 47,774 39,499
----------- --------- --------- ---------
Stock-based compensation
expense:
Cost of revenues (16) 49 49 216
Sales and marketing 61 218 243 802
General and
administrative 447 1,225 1,868 4,622
----------- --------- --------- ---------
492 1,492 2,160 5,640
----------- --------- --------- ---------
Total non-cash expenses
in loss from operations $15,666 $15,572 $49,934 $45,139
=========== ========= ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Assets Sept. 30, Dec. 31,
2003 2002
------------ ---------
(unaudited)
Cash, cash equivalents and short-term
investments $25,223 $41,216
Restricted cash 2,193 4,407
Accounts receivable, net 9,393 9,152
Property and equipment, net 347,846 390,048
Intangible assets, net 23,846 24,981
Other assets 15,885 22,199
------------ ---------
Total assets $424,386 $492,003
============ =========
Liabilities and Stockholders' Equity
Accounts payable $4,371 $7,243
Accrued expenses (1) 10,235 13,104
Accrued restructuring charges 1,561 11,528
Accrued interest payable 3,071 2,311
Debt facilities and capital lease obligations 4,337 9,224
Credit facility 90,519 91,510
Senior notes 29,142 28,908
Convertible secured notes 28,475 25,354
Other liabilities 21,116 18,627
------------ ---------
Total liabilities 192,827 207,809
------------ ---------
Preferred stock 2 2
Common stock 9 8
Additional paid-in capital 650,608 638,065
Deferred stock-based compensation (1,636) (2,865)
Accumulated other comprehensive income 683 617
Accumulated deficit (418,107) (351,633)
------------ ---------
Total stockholders' equity 231,559 284,194
------------ ---------
Total liabilities and stockholders' equity $424,386 $492,003
============ =========
- -----------------------------------------------
(1) Accrued expenses include $10,000 and $4,488,000 of accrued merger
and financing costs as of September 30, 2003 and December 31,
2002, respectively.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months
Ended
Sept. 30, Sept. 30,
2003 2002
------------ ---------
(unaudited)
Cash flows from operating activities:
Net loss $(66,474) $(82,339)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation, amortization and accretion 47,774 39,499
Amortization of stock-based compensation 2,160 5,640
Gain on debt extinguishment - (27,188)
Restructuring charges - 28,960
Non-cash interest expense 7,245 3,254
Other reconciling items 2,492 3,520
Changes in operating assets and liabilities:
Accounts receivable (194) (2,150)
Accounts payable and accrued expenses (1,263) (3,180)
Accrued restructuring charges (10,617) (8,869)
Accrued merger and financing costs (4,478) -
Accrued interest payable (990) 4,999
Other assets and liabilities 4,001 8,113
------------ ---------
Net cash used in operating activities (20,344) (29,741)
------------ ---------
Cash flows from investing activities:
Purchases of property and equipment (2,889) (5,091)
Payments of accrued construction in
progress - (28,708)
Other investing activities 2,206 27,292
------------ ---------
Net cash used in investing activities (683) (6,507)
------------ ---------
Cash flows from financing activities:
Proceeds from convertible secured notes 10,000 -
Repayment of debt facilities and
capital lease obligations (5,102) (5,201)
Repayment of credit facility (990) (5,000)
Repayment of senior notes - (2,511)
Other financing activities 1,063 (988)
------------ ---------
Net cash provided by (used in)
financing activities 4,971 (13,700)
------------ ---------
Effect of foreign currency exchange rates on
cash and cash equivalents 63 427
------------ ---------
Net decrease in cash, cash equivalents and
short-term investments (15,993) (49,521)
Cash, cash equivalents and short-term
investments at beginning of period 41,216 58,831
------------ ---------
Cash, cash equivalents and short-term
investments at end of period $25,223 $9,310
============ =========
CONTACT: Equinix, Inc.
Jason Starr, 650-513-7402 (Investor Relations)
jstarr@equinix.com
or
K/F Communications, Inc.
David Fonkalsrud, 415-255-6506
dave@kfcomm.com