Exhibit 99.1
Equinix Reports Fourth Quarter and Year-End 2004 Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--Feb. 9, 2005--Equinix, Inc.
(Nasdaq:EQIX)
-- Increased annual revenues by 39% over previous year
-- Increased annual EBITDA to $35.6 million, up from $1.7 million in
previous year
-- Generated free cash flow of $16.2 million for 2004
-- Raises 2005 revenue guidance to $205.0 - $215.0 million
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, 2004.
Revenues were $45.0 million for the fourth quarter and $163.7 million for
the year ended December 31, 2004, representing a 6% increase over the previous
quarter, and a 39% increase over 2003 revenues. Recurring revenues, consisting
of colocation, interconnection and managed services, were $42.6 million for the
quarter and $154.5 million for the year ended December 31, 2004, a 6% increase
over the previous quarter, and a 40% increase over 2003.
Non-recurring revenues for the fourth quarter were $2.4 million, consisting
entirely of professional services and installation fees. Non-recurring revenues
for the year ended December 31, 2004 were $9.2 million, consisting of $8.3
million of professional services and installation fees, and $889,000 of customer
settlements. Annual non-recurring revenues excluding customer settlements
increased 34% year over year.
Cost of revenues were $34.7 million for the fourth quarter and $137.0
million for the year ended December 31, 2004. Cost of revenues, excluding
non-cash depreciation, amortization, accretion and stock-based compensation were
$20.9 million for the fourth quarter and $82.4 million for the year ended
December 31, 2004. Cash gross margins, defined as gross profit less non-cash
depreciation, amortization, accretion and stock-based compensation, divided by
revenues, for the quarter were 53%, up from 51% the previous quarter. Cash gross
margins were 50% for 2004, up from 38% in 2003.
Selling, general and administrative expenses were $13.1 million for the
fourth quarter. Selling, general and administrative expenses, excluding non-cash
depreciation, amortization and stock-based compensation were $11.7 million for
the fourth quarter, consistent with the previous quarter, and $45.6 million for
2004, a 6% increase over 2003.
The company was able to expand its footprint by 26% through the acquisition
of fully built-out data centers at costs significantly below those costs we
would incur to expand our existing centers. As a result, the company made the
decision to exit leases for excess space located in its Secaucus and Los Angeles
markets and recorded a restructuring charge totaling $17.7 million.
Net loss for the fourth quarter was $22.7 million, or a basic and diluted
net loss per share of $1.21 on 18.8 million weighted-average shares outstanding.
Excluding the restructuring charge, the pro forma basic and diluted net loss per
share for the fourth quarter was $0.27. Net loss for the year ended December 31,
2004 was $68.6 million, or a basic and diluted net loss per share of $3.87.
Excluding the restructuring charge and the loss on debt extinguishment and
conversion during the year, the pro forma basic and diluted net loss per share
for 2004 was $1.96.
EBITDA, defined as loss from operations less depreciation, amortization,
accretion, stock-based compensation expense and restructuring charges, for the
fourth quarter was $12.4 million and $35.6 million for the year ended December
31, 2004, representing a 23% increase over the previous quarter and up from $1.7
million in 2003. This reflects a 90% EBITDA flow-through rate on incremental
revenues in the quarter and a 74% EBITDA flow-through rate for 2004.
Capital expenditures in the fourth quarter were $6.2 million. A total of
$3.5 million in the quarter was attributed to ongoing capital expenditures, $2.2
million was attributed to expansion capital expenditures and $539,000 was
related to directly billable capital expenditures to complete an existing U.S.
government project. Capital expenditures for the year ended December 31, 2004
were $22.9 million. A total of $10.6 million in the year was attributed to
ongoing capital expenditures, $9.9 million was attributed to expansion capital
expenditures and the remaining $2.4 million was related to directly billable
capital expenditures to expand an existing U.S. government project.
Cash generated from operations in the quarter was $10.6 million. Cash
generated from operations for the year ended December 31, 2004 was $36.9
million. Cash used in investing activities was $4.5 million in the quarter. Cash
used in investing activities for the year was $20.7 million. As a result, the
company generated $6.1 million of free cash flow in the fourth quarter and $16.2
million for the year ended December 31, 2004. Free cash flow is defined as net
cash generated from operating activities less net cash used in investing
activities (excluding the purchase, sale and maturities of short-term and
long-term investments).
As of December 31, 2004, the company's cash, cash equivalents and
investments were $108.1 million, an increase of $35.1 million over the year.
Equinix added 69 new customers in the fourth quarter and 324 customers for
the year 2004. Customers added in the fourth quarter included Arsenal Digital,
Belgacom SA, China Merchant Bank, INET ATS (Instinet, LLC), Movielink, Solo Cup,
Telecom New Zealand and Virgin Blue. The company received additional orders in
the quarter from approximately 50% of its existing US customers including
Doubleclick, Merrill Lynch, Ticketmaster, the U.S. Government, WebEx and Yahoo!.
The number of cabinets billing as of December 31, 2004 was approximately
11,100, up from approximately 10,750 the previous quarter, and up from 8,200 as
of December 31, 2003. Churn was 4.1% for the quarter on a cabinet basis,
primarily related to a customer contract which the company elected not to renew.
Monthly recurring revenue churn was approximately 3% in the quarter. Churn, on
both a cabinet and monthly recurring revenue basis, was approximately 12% for
the year ended December 31, 2004. The company ended the year with 950 customers
and a weighted-average utilization rate of 45% in its existing IBX centers,
excluding the new Silicon Valley IBX, which is scheduled to open for customers
in March 2005. Average monthly recurring revenue per cabinet on a
weighted-average basis increased to $1,292 for the quarter from $1,270 the
previous quarter.
"2004 was a breakout year as we exceeded all of our expectations," said
Peter Van Camp, CEO of Equinix. "As we look to 2005, we continue to aggressively
execute on all fronts, positioning Equinix for another great year as we drive
towards market leadership."
Recent Company Developments
-- U.S. interconnection services revenue increased by 8% over third
quarter 2004 and grew to 23% of total U.S. recurring revenues for the
quarter. Total company interconnection service revenue represented 21%
of total recurring revenues for the quarter. Customer cross-connects
grew to 9,005, a 6% increase over the prior quarter. Ports on the
Equinix GigE Exchange totaled 330, a 5% increase over the prior
quarter
-- In the fourth quarter 2004, Equinix signed a long-term lease for an
additional 103,000 square feet of data center space in San Jose. The
expansion, acquired through the purchase of assets and the assumption
of the existing data center lease, adds approximately 2,000 cabinets
and expands Equinix's Silicon Valley footprint to approximately
400,000 square feet and its global footprint to approximately 1.4
million square feet.
-- Equinix converted 95%, or an aggregate of approximately $38.0 million
of the outstanding convertible secured notes held by i-STT, including
accrued and unpaid interest, into 4.1 million shares of Equinix Series
A-1 preferred stock, effective January 1, 2005. On February 1, 2005,
these shares converted into Equinix common stock on a 1 to 1 basis.
Business Outlook
For the first quarter 2005, the company expects revenue to be in the range
of $48.5 to $49.5 million. Cash gross margins are expected to be in the range of
51 - 52%. Cash selling, general and administrative expenses are expected to be
in the range of $12.5 to $13.5 million. EBITDA is expected to be between $12.0
and $13.0 million. Capital expenditures are estimated to be in the range of $7.0
to $8.0 million, including capital required for improvements to the newly
acquired Silicon Valley IBX and Washington, D.C. area IBX.
For the full year of 2005, revenues are expected to be in the range of
$205.0 to $215.0 million. Cash gross margins are expected to be in the range of
53 - 55%. Cash selling, general and administrative expenses are expected to be
in the range of $50.0 to $52.0 million. EBITDA is expected to be between $60.0
and $65.0 million. Capital expenditures for 2005 are expected to be in a range
of $23.0 to $27.0 million, comprised of $13.0 to $15.0 million of ongoing
capital expenditures and approximately $10.0 to $12.0 million of expansion
capital expenditures for the new Silicon Valley IBX and the remaining build-out
of the Washington D.C. area IBX expansion.
With the conversion of 95% of i-STT's convertible secured notes, the
company is accelerating its guidance to become net income positive, excluding
the impact of the new stock option expensing guidelines, from fourth quarter
2005 to third quarter 2005.
The company will discuss its results and guidance on its quarterly
conference call on Wednesday, February 9, 2005, 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 replay of
the call will be available on Wednesday, February 9, 2005 at 7:30 p.m. (ET) by
dialing 1-402-220-9761. In addition, the Webcast will be available on the
company's Web site at www.equinix.com. No password is required for either method
of replay. 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 recently-acquired data centers;
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) and free cash flow to evaluate
its operations. In presenting these non-GAAP financial measures, Equinix
excludes certain non-cash or non-recurring items that it believes are not good
indicators of the company's current or future operating performance. These
non-cash or non-recurring items are depreciation, amortization, accretion,
stock-based compensation, non-cash interest, and, with respect to 2004 results,
the non-cash portion of loss on debt extinguishment and conversion and
restructuring charges (there were no such charges or losses in 2003). Recent
legislative and regulatory changes 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
non-cash or non-recurring 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. 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 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. Equinix excludes
interest expense associated with the amortization of debt issuance costs and
discounts, as well as the interest expense associated with its convertible
secured notes as such interest expenses do not require any cash in the periods
presented nor will they in future periods. Lastly, with respect to its 2004
results, Equinix excludes restructuring charges and the non-cash portion of the
loss on debt extinguishment and conversion. The restructuring charges relate to
the company's decision to exit leases for excess space adjacent to several of
our IBX centers, which we do not intend to build out now or in the future. The
non-cash portion of the loss on debt extinguishment and conversion, which
represents the write-off of the unamortized debt issuance costs and discounts
associated with the debt facilities extinguished or converted as no cash was
expended in the periods presented for such write-offs nor will there be in the
future. Management believes such restructuring charges and write-offs of debt
issuance costs and discounts were unique costs that are not expected to recur,
and consequently, does not consider these charges 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, 2004 and 2003, presented within this press release.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION
(in thousands, except per share detail)
(unaudited)
Three Months Ended
---------- --------- ----------
Dec. 31, Sept. 30, Dec. 31,
2004 2004 2003
-------- --------- --------
Recurring revenues $ 42,621 $40,057 $ 31,496
Non-recurring revenues 2,368 2,382 1,658
-------- ------- --------
Revenues 44,989 42,439 33,154
Cost of revenues 34,705 34,310 32,554
-------- ------- --------
Gross profit (loss) 10,284 8,129 600
-------- ------- --------
Operating expenses:
Sales and marketing 5,106 4,433 5,273
General and administrative 7,950 8,294 7,943
Restructuring charges 17,685 - -
-------- ------- --------
Total operating expenses 30,741 12,727 13,216
-------- ------- --------
Loss from operations (20,457) (4,598) (12,616)
-------- ------- --------
Interest and other income (expense):
Interest income 472 335 114
Interest expense and other (2,731) (2,352) (5,195)
Loss on debt extinguishment
and conversion - - -
-------- ------- --------
Total interest and other, net (2,259) (2,017) (5,081)
-------- ------- --------
Net loss before income taxes (22,716) (6,615) (17,697)
Income taxes 47 - -
--------- -------- ---------
Net loss $(22,669) $(6,615) $(17,697)
======== ======= ========
Basic and diluted net loss
per share $ (1.21) $ (0.36) $ (1.49)
======== ======= ========
Shares used in computing basic
and diluted net loss per share 18,766 18,386 11,905
======== ======= ========
Pro forma basic and diluted net
loss per share (1) $ (0.27) $ (0.36) $ (1.49)
======== ======= ========
Shares used in computing
pro forma basic and diluted
net loss per share 18,766 18,386 11,905
======== ======= ========
Twelve Months Ended
-----------------------
Dec. 31, Dec. 31,
2004 2003
-------- --------
Recurring revenues $154,432 $109,957
Non-recurring revenues 9,239 7,985
-------- --------
Revenues 163,671 117,942
Cost of revenues 136,950 128,121
-------- --------
Gross profit (loss) 26,721 (10,179)
-------- --------
Operating expenses:
Sales and marketing 18,604 19,483
General and administrative 32,494 34,293
Restructuring charges 17,685 -
-------- --------
Total operating expenses 68,783 53,776
-------- --------
Loss from operations (42,062) (63,955)
-------- --------
Interest and other income (expense):
Interest income 1,291 296
Interest expense and other (11,496) (20,512)
Loss on debt extinguishment and conversion (16,211) -
-------- --------
Total interest and other, net (26,416) (20,216)
-------- --------
Net loss before income taxes (68,478) (84,171)
Income taxes (153) -
--------- --------
Net loss $(68,631) $(84,171)
======== ========
Basic and diluted net loss per share $ (3.87) $ (8.76)
======== ========
Shares used in computing basic and diluted
net loss per share 17,719 9,604
======== ========
Pro forma basic and diluted
net loss per share (1) $ (1.96) $ (8.76)
======== ========
Shares used in computing
pro forma basic and diluted
net loss per share 17,719 9,604
======== ========
- ---------------------------------
(1) Pro forma basic and diluted net loss per share excludes the
$17,685,000 restructuring charge during the three and twelve
months ended December 31, 2004. The pro forma basic and
diluted net loss per share also excludes the $16,211,000 loss
on debt extinguishment and conversion during the twelve months
ended December 31, 2004.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- NON-GAAP PRESENTATION
(in thousands)
(unaudited)
Three Months Ended
----------- ---------- ---------
Dec. 31, Sept. 30, Dec. 31,
2004 2004 2003
-------- -------- --------
Recurring revenues $ 42,621 $ 40,057 $ 31,496
Non-recurring revenues 2,368 2,382 1,658
-------- -------- --------
Revenues (1) 44,989 42,439 33,154
Cash cost of revenues (2) 20,928 20,659 19,001
-------- -------- --------
Cash gross profit (3) 24,061 21,780 14,153
-------- -------- --------
Cash operating expenses (4):
Cash sales and marketing
expenses(5) 4,613 3,958 4,691
Cash general and administrative
expenses (6) 7,085 7,756 6,359
-------- -------- --------
Total cash operating expenses 11,698 11,714 11,050
-------- -------- --------
EBITDA (7) (8) 12,363 10,066 3,103
-------- -------- --------
Cash interest and other income
(expense) (9):
Interest income 472 335 114
Cash interest expense and
other (10) (972) (657) (2,173)
Cash loss on debt
extinguishment and
conversion (11) - - -
Income taxes 47 - -
-------- -------- --------
Total cash interest and
other, net (453) (322) (2,059)
-------- -------- --------
Cash net income (loss) (12) $ 11,910 $ 9,744 $ 1,044
======== ======== ========
Cash gross margins (13) 53% 51% 43%
======== ======== ========
- -------------------------------
(1) The geographic split of our revenues is presented below:
U.S. revenues $ 38,705 $ 36,779 $ 28,144
Asia-Pacific revenues 6,284 5,660 5,010
-------- -------- --------
Revenues $ 44,989 $ 42,439 $ 33,154
======== ======== ========
(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 $ 34,705 $ 34,310 $ 32,554
Depreciation, amortization
and accretion expense (13,777) (13,638) (13,543)
Stock-based compensation
expense - (13) (10)
-------- -------- --------
Cash cost of revenues $ 20,928 $ 20,659 $ 19,001
======== ======== ========
(3) We define cash gross profit as revenues less cash cost of
revenues (as defined above).
(4) We define cash operating expenses as operating expenses less
depreciation, amortization and stock-based compensation. We
also refer to cash operating expenses as cash selling, general
and administrative expenses or "cash SG&A".
(5) We define cash sales and marketing expenses as sales and
marketing expenses less depreciation, amortization and
stock-based compensation as presented below:
Sales and marketing expenses $ 5,106 $ 4,433 $ 5,273
Depreciation and
amortization expense (484) (469) (531)
Stock-based compensation expense (9) (6) (51)
-------- -------- --------
Cash sales and marketing
expenses $ 4,613 $ 3,958 $ 4,691
======== ======== ========
(6) We define cash general and administrative expenses as general
and administrative expenses less depreciation, amortization
and stock-based compensation as presented below:
General and administrative
expenses $ 7,950 $ 8,294 $ 7,943
Depreciation and
amortization expense (426) (398) (900)
Stock-based compensation expense (439) (140) (684)
-------- -------- --------
Cash general and
administrative expenses $ 7,085 $ 7,756 $ 6,359
======== ======== ========
(7) We define EBITDA as loss from operations less depreciation,
amortization, accretion, stock-based compensation expense and
restructuring charges as presented below:
Loss from operations $(20,457) $ (4,598) $(12,616)
Depreciation, amortization
and accretion expense 14,687 14,505 14,974
Stock-based compensation
expense 448 159 745
Restructuring charges 17,685 - -
-------- -------- --------
EBITDA $ 12,363 $ 10,066 $ 3,103
======== ======== ========
(8) The geographic split of our EBITDA is presented below:
U.S. loss from operations $(18,877) $ (3,028) $ (9,633)
U.S. depreciation,
amortization and accretion
expense 13,079 12,963 13,490
U.S. stock-based
compensation expense 448 159 745
U.S. restructuring charges 17,685 - -
-------- -------- --------
U.S. EBITDA 12,335 10,094 4,602
-------- -------- --------
Asia-Pacific loss from
operations (1,580) (1,570) (2,983)
Asia-Pacific depreciation,
amortization and accretion
expense 1,608 1,542 1,484
Asia-Pacific stock-based
compensation expense - - -
Asia-Pacific restructuring
charges - - -
-------- -------- --------
Asia-Pacific EBITDA 28 (28) (1,499)
-------- -------- --------
EBITDA $ 12,363 $ 10,066 $ 3,103
======== ======== ========
(9) We define cash interest and other income (expense) as interest
expense plus income taxes less interest income, non-cash
interest expense and non-cash loss on debt extinguishment and
conversion. Non-cash interest expense is comprised of
amortization of debt discounts and debt issuance costs and
non-cash interest on our convertible secured notes. Non-cash
loss on debt extinguishment and conversion is comprised of the
non-cash write-off of debt issuance costs and discounts.
(10) 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 $ (2,731) $ (2,352) $ (5,195)
Amortization of debt
discounts and debt
issuance costs 442 437 1,653
Non-cash interest on
convertible secured notes 1,317 1,258 1,369
-------- -------- --------
Non-cash interest expense 1,759 1,695 3,022
--------- -------- ---------
Cash interest expense and
other $ (972) $ (657) $ (2,173)
======== ======== ========
(11) Loss on debt extinguishment
and conversion $ - $ - $ -
Non-cash write-off of debt
issuance costs and
discounts - - -
-------- -------- --------
Non-cash loss on debt
extinguishment and
conversion - - -
----------- -------- ---------
Cash loss on debt
extinguishment and
conversion $ - $ - $ -
======== ======== ========
(12) We define cash net income (loss) as net income (loss) less
depreciation, amortization, accretion, stock-based
compensation expense, restructuring charges, non-cash interest
expense and non- cash loss on debt extinguishment and
conversion as presented below:
Net income (loss) $(22,669) $ (6,615) $(17,697)
Depreciation, amortization
and accretion expense 14,687 14,505 14,974
Stock-based compensation
expense 448 159 745
Restructuring charges 17,685 - -
Non-cash interest expense
(defined above) 1,759 1,695 3,022
Non-cash loss on debt
extinguishment and
conversion (defined above) - - -
-------- -------- --------
Cash net income (loss) $ 11,910 $ 9,744 $ 1,044
======== ======== ========
(13) We define cash gross margins as cash gross profit divided by
revenues.
Twelve Months Ended
----------------------
Dec. 31, Dec. 31,
2004 2003
-------- --------
Recurring revenues $154,432 $109,957
Non-recurring revenues 9,239 7,985
-------- --------
Revenues (1) 163,671 117,942
Cash cost of revenues (2) 82,438 73,176
-------- --------
Cash gross profit (3) 81,233 44,766
-------- --------
Cash operating expenses (4):
Cash sales and marketing expenses(5) 16,642 17,096
Cash general and administrative
expenses (6) 28,977 25,972
-------- --------
Total cash operating expenses 45,619 43,068
-------- --------
EBITDA (7) (8) 35,614 1,698
-------- --------
Cash interest and other income (expense) (9):
Interest income 1,291 296
Cash interest expense and other (10) (3,691) (10,245)
Cash loss on debt extinguishment and
conversion (11) (2,505) -
Income taxes (153) -
-------- --------
Total cash interest and other, net (5,058) (9,949)
-------- --------
Cash net income (loss) (12) $ 30,556 $ (8,251)
======== ========
Cash gross margins (13) 50% 38%
======== ========
- -------------------------------------------
(1) The geographic split of our revenues is presented below:
U.S. revenues $141,598 $ 99,669
Asia-Pacific revenues 22,073 18,273
-------- --------
Revenues $163,671 $117,942
======== ========
(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 $136,950 $128,121
Depreciation, amortization and
accretion expense (54,477) (54,886)
Stock-based compensation expense (35) (59)
-------- --------
Cash cost of revenues $ 82,438 $ 73,176
======== ========
(3) We define cash gross profit as revenues less cash cost of
revenues (as defined above).
(4) We define cash operating expenses as operating expenses less
depreciation, amortization and stock- based compensation. We
also refer to cash operating expenses as cash selling, general
and administrative expenses or "cash SG&A".
(5) We define cash sales and marketing expenses as sales and
marketing expenses less depreciation, amortization and
stock-based compensation as presented below:
Sales and marketing expenses $ 18,604 $ 19,483
Depreciation and amortization expense (1,902) (2,093)
Stock-based compensation expense (60) (294)
-------- --------
Cash sales and marketing expenses $ 16,642 $ 17,096
======== ========
(6) We define cash general and administrative expenses as general
and administrative expenses less depreciation, amortization
and stock-based compensation as presented below:
General and administrative expenses $ 32,494 $ 34,293
Depreciation and amortization expense (2,145) (5,769)
Stock-based compensation expense (1,372) (2,552)
-------- --------
Cash general and administrative expenses $ 28,977 $ 25,972
======== ========
(7) We define EBITDA as loss from operations less depreciation,
amortization, accretion, stock-based compensation expense and
restructuring charges as presented below:
Loss from operations $(42,062) $(63,955)
Depreciation, amortization and
accretion expense 58,524 62,748
Stock-based compensation expense 1,467 2,905
Restructuring charges 17,685 -
-------- --------
EBITDA $ 35,614 $ 1,698
======== ========
(8) The geographic split of our EBITDA is presented below:
U.S. loss from operations $(34,107) $(48,621)
U.S. depreciation, amortization and
accretion expense 52,412 55,775
U.S. stock-based compensation expense 1,467 2,905
U.S. restructuring charges 17,685 -
-------- --------
U.S. EBITDA 37,457 10,059
-------- --------
Asia-Pacific loss from operations (7,955) (15,334)
Asia-Pacific depreciation, amortization
and accretion expense 6,112 6,973
Asia-Pacific stock-based compensation
expense - -
Asia-Pacific restructuring charges - -
-------- --------
Asia-Pacific EBITDA (1,843) (8,361)
-------- --------
EBITDA $ 35,614 $ 1,698
======== ========
(9) We define cash interest and other income (expense) as interest
expense plus income taxes less interest income, non-cash
interest expense and non-cash loss on debt extinguishment and
conversion. Non-cash interest expense is comprised of
amortization of debt discounts and debt issuance costs and
non-cash interest on our convertible secured notes. Non-cash
loss on debt extinguishment and conversion is comprised of the
non-cash write-off of debt issuance costs and discounts.
(10) 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 $(11,496) $(20,512)
Amortization of debt discounts and debt
issuance costs 2,693 5,574
Non-cash interest on convertible
secured notes 5,112 4,693
-------- --------
Non-cash interest expense 7,805 10,267
--------- ---------
Cash interest expense and other $ (3,691) $(10,245)
======== ========
(11) Loss on debt extinguishment and
conversion $(16,211) $ -
Non-cash write-off of debt issuance
costs and discounts 13,706 -
-------- --------
Non-cash loss on debt extinguishment
and conversion 13,706 -
--------- ---------
Cash loss on debt extinguishment and
conversion $ (2,505) $ -
======== ========
(12) We define cash net income (loss) as net income (loss) less
depreciation, amortization, accretion, stock-based
compensation expense, restructuring charges, non-cash interest
expense and non- cash loss on debt extinguishment and
conversion as presented below:
Net income (loss) $(68,631) $(84,171)
Depreciation, amortization and
accretion expense 58,524 62,748
Stock-based compensation expense 1,467 2,905
Restructuring charges 17,685 -
Non-cash interest expense (defined
above) 7,805 10,267
Non-cash loss on debt extinguishment
and conversion (defined above) 13,706 -
-------- --------
Cash net income (loss) $ 30,556 $ (8,251)
======== ========
(13) We define cash gross margins as cash gross profit divided by
revenues.
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Assets Dec. 31, 2004 Dec. 31, 2003
------------- -------------
(unaudited)
Cash, cash equivalents and investments $ 108,092 $ 72,971
Accounts receivable, net 11,919 10,178
Property and equipment, net 343,361 343,554
Goodwill and other intangible assets, net 22,253 23,509
Debt issuance costs, net 3,164 5,954
Prepaid expenses 3,603 2,014
Deposits 6,062 3,246
Other assets 3,344 3,106
--------- ---------
Total assets $ 501,798 $ 464,532
========= =========
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 18,116 $ 15,598
Accrued restructuring charges 14,750 828
Accrued property and equipment 2,912 2,454
Accrued interest payable 1,706 1,114
Capital lease obligations 35,204 201
Debt facilities - 37,492
Senior notes - 29,220
Convertible secured notes 35,824 31,683
Convertible subordinated debentures 86,250 -
Deferred rent 22,915 20,283
Deferred installation revenue 3,745 2,693
Customer deposits 3,360 249
Other liabilities 3,310 2,640
--------- ---------
Total liabilities 228,092 144,455
--------- ---------
Preferred stock 2 2
Common stock 19 15
Additional paid-in capital 776,123 755,698
Deferred stock-based compensation (260) (1,032)
Accumulated other comprehensive income 2,257 1,198
Accumulated deficit (504,435) (435,804)
--------- ---------
Total stockholders' equity 273,706 320,077
--------- ---------
Total liabilities and
stockholders' equity $ 501,798 $ 464,532
========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
(in thousands)
Twelve Months Ended
-------------------------
Dec. 31, 2004 Dec. 31, 2003
------------- -------------
(unaudited)
Cash flows from operating activities:
Net loss $(68,631) $(84,171)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation, amortization and accretion 58,524 62,748
Amortization of stock-based compensation 1,467 2,905
Non-cash interest expense 7,805 10,267
Loss on debt extinguishment
and conversion 16,211 -
Restructuring charges 17,685 -
Other reconciling items 3,435 3,360
Changes in operating assets and
liabilities:
Accounts receivable (1,691) (662)
Accounts payable and accrued
expenses 2,608 (98)
Accrued restructuring charges (761) (11,350)
Accrued merger and financing costs - (4,488)
Accrued interest payable 478 (1,981)
Other assets and liabilities (218) 6,204
-------- --------
Net cash provided by (used
in) operating activities 36,912 (17,266)
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (22,934) (7,750)
Accrued property and equipment 458 2,454
Other investing activities 1,751 2,215
-------- --------
Net cash used in investing
activities (20,725) (3,081)
-------- --------
Cash flows from financing activities:
Proceeds from warrants, stock options
and employee stock purchase plan 7,289 2,121
Proceeds from secondary offering - 104,443
Proceeds from convertible secured notes - 10,000
Proceeds from convertible subordinated
debentures 86,250 -
Repayment of debt facilities and
capital lease obligations (3,632) (6,074)
Repayment of credit facility (34,281) (57,229)
Repayment of senior notes (30,475) -
Debt issuance and extinguishment costs (5,912) (973)
-------- --------
Net cash provided by
financing activities 19,239 52,288
-------- --------
Effect of foreign currency exchange rates
on cash and cash equivalents (305) (186)
-------- --------
Net increase (decrease) in cash, cash
equivalents and investments 35,121 31,755
Cash, cash equivalents and investments at
beginning of period 72,971 41,216
-------- --------
Cash, cash equivalents and investments at
end of period $108,092 $ 72,971
======== ========
Free cash flow (2) $ 16,187 $(20,347)
======== ========
- ------------------------------------------
(1) The cash flow statements presented herein combine our
short-term and long-term investments with our cash and cash
equivalents in an effort to present our total unrestricted
cash and equivalent balances. In our quarterly filings with
the SEC on Forms 10-Q and 10-K, the purchase, sale and
maturities of our short-term and long-term investments will be
presented as activities within the investing activities
portion of the cash flow statements.
(2) We define free cash flow as net cash provided by (used in)
operating activities plus net cash used in investing
activities (excluding the purchase, sale and maturities of
short-term and long-term investments) as presented below:
Net cash provided by (used in)
operating activities as presented above $ 36,912 $(17,266)
Net cash provided by (used in) investing
activities as presented above (20,725) (3,081)
-------- --------
Free cash flow positive (negative) $ 16,187 $(20,347)
======== ========
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