Exhibit 99.1
Equinix Reports Fourth Quarter and Year End 2003 Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--Feb. 4, 2004--Equinix, Inc.
(Nasdaq:EQIX)
-- Increased fourth quarter recurring revenues by 11% over
previous quarter and annual recurring revenues by 68% over
2002
-- Added 73 new customers in the fourth quarter including Bank of
Scotland International, The Clearing Corporation,
Encyclopaedia Britannica, Goldman Sachs, Royal Bank of Canada,
Ticketmaster and Travelweb. Ended the quarter with over 700
customers
-- Raised over $110 million in common stock offering and reduced
cash-pay debt to below cash balance levels
Equinix, Inc. (Nasdaq:EQIX), the leading provider of
network-neutral data centers and Internet exchange services, today
reported its quarterly and year end results for the period ended
December 31, 2003.
Revenues were $33.2 million for the fourth quarter and $117.9
million for the year ended December 31, 2003, representing a 7%
increase over the previous quarter, and a 53% increase over 2002
revenues. Recurring revenues, consisting of colocation,
interconnection and managed services, were $31.5 million for the
fourth quarter and $109.9 million for the year ended December 31,
2003, an 11% increase over the previous quarter and a 68% increase
over the year ended December 31, 2002.
Non-recurring revenues for the fourth quarter were $1.7 million,
consisting primarily of professional services and installation fees.
Non-recurring revenues for the year ended December 31, 2003 were $8.0
million, consisting of $6.2 million of professional services and
installation fees, and $1.8 million of customer settlements. Annual
non-recurring revenues for professional services and installation fees
increased 53% year over year.
Net loss for the fourth quarter was $17.7 million, or a basic and
diluted net loss per share of $1.49. Net loss for the year ended
December 31, 2003 was $84.2 million, or a net loss per share of $8.76.
Cash net income, defined as net income or loss less depreciation,
amortization, accretion, stock-based compensation and non-cash
interest expenses, for the quarter was $1.0 million. Cash net loss for
the year ended December 31, 2003 was $8.3 million.
EBITDA, defined as loss from operations less depreciation,
amortization, and accretion and stock-based compensation expense for
the fourth quarter was $3.1 million and $1.7 million for the year
ended December 31, 2003.
Cash generated from operations for the quarter was $3.1 million
versus $1.9 million generated in the third quarter and cash used in
operations for the year ended December 31, 2003 was $17.3 million
versus $27.5 million used in operations for the year ended December
31, 2002. Capital expenditures for the fourth quarter were $4.9
million and $7.8 million for the year ended December 31, 2003.
As of December 31, 2003, the company's cash balance was $73.0
million.
Equinix added 73 new customers in the fourth quarter and 291
customers for the calendar year 2003. Customers added in the fourth
quarter included AWS Convergence Technologies (The Weatherbug(TM)),
Bank of Scotland International, The Clearing Corporation, Citysearch,
Encyclopaedia Britannica, Goldman Sachs, Matsushita Electric
Corporation of America, Royal Bank of Canada, Ticketmaster and
Travelweb. The company received additional orders in the quarter from
greater than 47% of its existing US customers including Amazon.com,
Electronic Arts, IBM and the U.S. Government. The company ended the
quarter with more than 700 customers.
"2003 was a breakthrough year for Equinix, achieving exceptional
results as we build this company towards market leadership," said
Peter Van Camp, CEO of Equinix. "Our network-neutral model and
interconnection services remain key differentiators in a market that
is undergoing significant changes. We expect this strategic advantage
to continue to make us a growth leader in our industry in 2004."
Recent Company Developments
-- U.S. interconnection services revenue increased by 12% over
third quarter 2003 and grew to 23% of total U.S. recurring
revenues for the quarter while total interconnection service
revenue represented 20% of total recurring revenues. Customer
cross-connects grew to 6,713, a 12% increase over the prior
quarter and a 98% increase over same quarter last year. Ports
on the Equinix GigE Exchange were reported at 267, a 12%
increase over the third quarter 2003, and a 77% increase over
the same quarter last year.
-- Equinix completed a common stock offering of 5.525 million
shares on November 18, 2003, priced at $20.00 per share. The
transaction resulted in gross proceeds to Equinix of $110
million.
-- Following its common stock offering, Equinix prepaid $55.2
million, or approximately 60% of its remaining credit
facility. As of December 31, 2003, the outstanding balance on
the credit facility was $34.3 million. The paydown reduces
Equinix's total debt level that requires cash interest
payments to approximately $68.3 million, which primarily
includes the remaining credit facility and our 13% senior
notes. This reduced debt level results in a reduction of
annual cash interest to approximately $7.0 million in 2004.
-- Equinix closed an agreement to sublease Sprint's E/Solutions
Internet Center in Santa Clara and acquire certain related
assets. The 160,000 square foot data center represents
Equinix's 14th Internet Business Exchange(TM) (IBX(R)) center,
expanding Equinix's global footprint to over 1.2 million
square feet in five countries.
Business Outlook
For the first quarter 2004, the company expects revenue to be in
the range of $35.0 to $36.0 million. EBITDA for the quarter is
expected to be between $4.0 and $5.0 million. Capital expenditures in
the quarter will be approximately $5.0 million, including capital
required for improvements to the newly acquired Sprint Santa Clara
center and capital to complete our significant customer deployment in
Singapore.
For 2004, revenues are expected to be in the range of $154.0 to
$162.0 million. Cash gross margins are expected to be in the range of
45-50%. EBITDA for the year is expected to be between $30.0 and $35.0
million. Capital expenditures for 2004 are expected to be in the range
of $10.0 to $15.0 million.
The company will discuss its results and guidance on its quarterly
conference call on Wednesday, February 4, 2004, 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. A reconciliation between GAAP information
and non-GAAP information contained in this press release is provided
in a table immediately following the Condensed Consolidated Statements
of Operations - GAAP Presentation. This information is also available
on our Web Site 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 to receive significant
revenue from customers in the recently-acquired Sprint 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.
Non-GAAP Financial Measures
Equinix continues to provide 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 EBITDA,
cash cost of revenues, cash gross margins, cash operating expenses
(also known as cash selling, general and administrative expenses or
cash SG&A), cash interest expense and cash net income (loss) to
evaluate its operations. In presenting these non-GAAP financial
measures, Equinix excludes certain non-cash items that it believes are
not good indicators of the company's current or future operating
performance. These non-cash items are depreciation, amortization,
accretion, stock-based compensation, non-cash interest, and, with
respect to 2002 results, restructuring charges and gains on
extinguishment of debt (there were no such charges or gains in 2003).
Equinix excludes these non-cash 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 competitor base.
Equinix excludes depreciation expense as these non-cash 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 ten 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. 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 non-cash cost that may not recur and is not
a good indicator of the company's current or future operating
performance. Equinix excludes non-cash stock-based compensation
expense as it represents expense attributed to stock options that have
no current or future cash obligations. As such, we, and our investors
and analysts, exclude this stock-based compensation expense when
assessing the cash generating performance of our operations. Lastly,
with respect to its 2002 results, Equinix excludes restructuring
charges, primarily related to an operating lease for certain
unimproved property. Management believes such restructuring charges
were unique costs that are not expected to recur, and consequently,
does not consider these restructuring costs as a normal component of
expenses related to current and ongoing operations.
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
ongoing business operations. Management believes that the inclusion of
these non-GAAP financial measures provide consistency and
comparability with past reports and provide 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 intends to calculate the various non-GAAP financial
measures in future periods consistent with how it was calculated for
the three and twelve months ended December 31, 2003 and 2002,
presented within this press release.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION
(in thousands, except per share detail)
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
--------- --------- --------- ---------
(unaudited)
Revenues $ 33,154 $ 18,803 $117,942 $ 77,188
Cost of revenues 32,554 25,474 128,121 104,073
--------- --------- --------- ---------
Gross profit (loss) 600 (6,671) (10,179) (26,885)
--------- --------- --------- ---------
Operating expenses:
Sales and marketing 5,273 3,079 19,483 15,247
General and administrative 7,943 7,924 34,293 30,659
Restructuring charges - (75) - 28,885
--------- --------- --------- ---------
Total operating
expenses 13,216 10,928 53,776 74,791
--------- --------- --------- ---------
Loss from operations (12,616) (17,599) (63,955) (101,676)
--------- --------- --------- ---------
Interest and other income
(expense):
Interest income 114 37 296 998
Interest expense and other (5,195) (8,687) (20,512) (35,098)
Gain on debt extinguishments - 86,970 - 114,158
--------- --------- --------- ---------
Total interest and
other, net (5,081) 78,320 (20,216) 80,058
--------- --------- --------- ---------
Net income (loss) $(17,697) $ 60,721 $(84,171) $(21,618)
========= ========= ========= =========
Basic net income (loss) per
share $ (1.49) $ 19.14 $ (8.76) $ (7.23)
========= ========= ========= =========
Diluted net income (loss) per
share $ (1.49) $ 18.12 $ (8.76) $ (7.23)
========= ========= ========= =========
Shares used in computing basic
net income (loss) per share 11,905 3,173 9,604 2,990
========= ========= ========= =========
Shares used in computing
diluted net income (loss)
per share 11,905 3,351 9,604 2,990
========= ========= ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- NON-GAAP PRESENTATION
(in thousands)
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
--------- --------- --------- ---------
(unaudited)
Revenues $ 33,154 $ 18,803 $117,942 $ 77,188
Cash cost of revenues(1) 19,001 12,644 73,176 55,959
--------- --------- --------- ---------
Cash gross profit(2) 14,153 6,159 44,766 21,229
--------- --------- --------- ---------
Cash operating expenses(3):
Cash sales and marketing
expenses(4) 4,691 2,929 17,096 14,295
Cash general and
administrative expenses(5) 6,359 5,083 25,972 18,765
--------- --------- --------- ---------
Total cash operating
expenses 11,050 8,012 43,068 33,060
--------- --------- --------- ---------
EBITDA (6) 3,103 (1,853) 1,698 (11,831)
--------- --------- --------- ---------
Restructuring charges - (75) - 28,885
--------- --------- --------- ---------
EBITDA after restructuring
charges 3,103 (1,778) 1,698 (40,716)
Cash interest and other
income (expense)(7):
Interest income 114 37 296 998
Cash interest expense and
other(8) (2,173) (7,762) (10,245) (30,919)
--------- --------- --------- ---------
Total cash interest and
other, net (2,059) (7,725) (9,949) (29,921)
--------- --------- --------- ---------
Cash net income (loss)(9) $ 1,044 $ (9,503) $ (8,251) $(70,637)
========= ========= ========= =========
Cash gross margins(10) 43% 33% 38% 28%
========= ========= ========= =========
- ------------------------------
(1) We define cash cost of revenues as cost of revenues less
depreciation, amortization, accretion and stock-based compensation
as presented below:
Cost of revenues $ 32,554 $ 25,474 $128,121 $104,073
Depreciation, amortization
and accretion expense (13,543) (12,780) (54,886) (47,848)
Stock-based compensation
expense (10) (50) (59) (266)
--------- --------- --------- ---------
Cash cost of revenues $ 19,001 $ 12,644 $ 73,176 $ 55,959
========= ========= ========= =========
(2) We define cash gross profit as revenues less cash cost of revenues
(as defined above).
(3) We define cash operating expenses as operating expenses less
depreciation, amortization, accretion, stock-based compensation
and restructuring charges. We also refer to cash operating
expenses as cash selling, general and administrative expenses or
"cash SG&A".
(4) We define cash sales and marketing expenses as sales and marketing
expenses less depreciation, amortization, accretion and
stock-based compensation as presented below:
Sales and marketing
expenses $ 5,273 $ 3,079 $ 19,483 $ 15,247
Depreciation and
amortization expense (531) - (2,093) -
Stock-based compensation
expense (51) (150) (294) (952)
--------- --------- --------- ---------
Cash sales and
marketing expenses $ 4,691 $ 2,929 $ 17,096 $ 14,295
========= ========= ========= =========
(5) We define cash general and administrative expenses as general and
administrative expenses less depreciation, amortization, accretion
and stock-based compensation as presented below:
General and administrative
expenses $ 7,943 $ 7,924 $ 34,293 $ 30,659
Depreciation and
amortization expense (900) (1,803) (5,769) (6,234)
Stock-based compensation
expense (684) (1,038) (2,552) (5,660)
--------- --------- --------- ---------
Cash general and
administrative
expenses $ 6,359 $ 5,083 $ 25,972 $ 18,765
========= ========= ========= =========
(6) We define EBITDA as loss from operations less depreciation,
amortization, accretion, stock-based compensation expense and
restructuring charges as presented below:
Loss from operations $(12,616) $(17,599) $(63,955) $(101,676)
Depreciation,
amortization and
accretion expense 14,974 14,583 62,748 54,082
Stock-based compensation
expense 745 1,238 2,905 6,878
Restructuring charges - (75) - 28,885
--------- --------- --------- ---------
EBITDA $ 3,103 $ (1,853) $ 1,698 $(11,831)
========= ========= ========= =========
(7) We define cash interest and other income (expense) as interest
expense less interest income less non-cash interest expense less
gains on debt extinguishment. Non-cash interest expense is
comprised of amortization of debt discounts and debt issuance
costs and non-cash interest on our convertible secured notes.
(8) Cash interest expense and other is defined as interest expense
less amortization of debt discounts and debt issuance costs and
non-cash interest on our convertible secured notes as presented
below:
Interest expense
and other $ (5,195) $ (8,687) $(20,512) $(35,098)
Amortization of debt
discounts and debt
issuance costs 1,653 925 5,574 4,179
Non-cash interest on
convertible secured
notes 1,369 - 4,693 -
--------- --------- --------- ---------
Non-cash interest
expense 3,022 925 10,267 4,179
--------- --------- --------- ---------
Cash interest
expense and other $ (2,173) $ (7,762) $(10,245) $(30,919)
========= ========= ========= =========
(9) We define cash net income (loss) as net income (loss) less
depreciation, amortization, accretion, stock-based compensation
expense, non-cash interest expense and gains on debt
extinguishment as presented below:
Net income (loss) $(17,697) $ 60,721 $(84,171) $(21,618)
Depreciation,
amortization and
accretion expense 14,974 14,583 62,748 54,082
Stock-based compensation
expense 745 1,238 2,905 6,878
Non-cash interest expense
(defined above) 3,022 925 10,267 4,179
Gains on debt
extinguishment - (86,970) - (114,158)
--------- --------- --------- ---------
Cash net income
(loss) $ 1,044 $ (9,503) $ (8,251) $(70,637)
========= ========= ========= =========
(10) We define cash gross margins as cash cost of revenues divided by
revenues.
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2003 2002
------------ ------------
(unaudited)
Assets
Cash, cash equivalents and short-term
investments $ 72,971 $ 41,216
Restricted cash 1,835 4,407
Accounts receivable, net 10,178 9,152
Property and equipment, net 343,554 390,048
Intangible assets, net 23,509 24,981
Other assets 12,485 22,199
------------ ------------
Total assets $464,532 $492,003
============ ============
Liabilities and Stockholders' Equity
Accounts payable $ 3,833 $ 7,243
Accrued expenses 14,219 13,104
Accrued restructuring charges 828 11,528
Accrued interest payable 1,114 2,311
Debt facilities and capital lease obligations 3,412 9,224
Credit facility 34,281 91,510
Senior notes 29,220 28,908
Convertible secured notes 31,683 25,354
Deferred rent 20,283 13,420
Other liabilities 5,582 5,207
------------ ------------
Total liabilities 144,455 207,809
------------ ------------
Preferred stock 2 2
Common stock 15 8
Additional paid-in capital 755,698 638,065
Deferred stock-based compensation (1,032) (2,865)
Accumulated other comprehensive income 1,198 617
Accumulated deficit (435,804) (351,633)
------------ ------------
Total stockholders' equity 320,077 284,194
------------ ------------
Total liabilities and stockholders'
equity $464,532 $492,003
============ ============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Twelve Months Ended
December 31, December 31,
2003 2002
------------ ------------
(unaudited)
Cash flows from operating activities:
Net loss $(84,171) $(21,618)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, amortization and accretion 62,748 54,082
Amortization of stock-based compensation 2,905 6,878
Gain on debt extinguishment - (114,158)
Restructuring charges - 28,885
Non-cash interest expense 10,267 4,179
Other reconciling items 3,246 4,138
Changes in operating assets and
liabilities:
Accounts receivable (548) (2,511)
Accounts payable and accrued expenses (6,567) 11,126
Accrued restructuring charges (11,350) (9,279)
Other assets and liabilities 6,204 10,769
------------ -----------
Net cash used in operating
activities (17,266) (27,509)
------------ -----------
Cash flows from investing activities:
Purchases of property and equipment (7,750) (6,508)
Additions to accrued property and equipment 2,454 -
Other investing activities 2,215 (1,020)
------------ -----------
Net cash used in investing
activities (3,081) (7,528)
------------ -----------
Cash flows from financing activities:
Proceeds from secondary offering 104,443 -
Acquisition of cash from i-STT and Pihana,
less acquisition costs - 29,180
Proceeds from convertible secured notes 10,000 30,000
Repayment of debt facilities and capital
lease obligations (6,074) (6,118)
Repayment of credit facility (57,229) (13,490)
Repayment of senior notes and debt
extinguishment costs - (21,291)
Other financing activities 1,148 (1,357)
------------ -----------
Net cash provided by financing
activities 52,288 16,924
------------ -----------
Effect of foreign currency exchange rates on
cash and cash equivalents (186) 498
------------ -----------
Net increase (decrease) in cash, cash
equivalents and short-term investments 31,755 (17,615)
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 $ 72,971 $ 41,216
============ ===========
CONTACT: Equinix, Inc.
Jason Starr, 650-513-7402 (Investor Relations)
jstarr@equinix.com
or
K/F Communications, Inc.
David Fonkalsrud, 415-255-6506 (Media)
dave@kfcomm.com