Exhibit 99.1
Equinix Reports Fourth Quarter and Year-End 2005 Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--Feb. 8, 2006--Equinix, Inc.
(Nasdaq:EQIX):
-- Increased quarterly revenues to $61.8 million, a 6% increase
over previous quarter; increased annual revenues to $221.1
million, a 35% increase over 2004
-- Increased annual EBITDA, a non-GAAP financial measure, to
$70.1 million, up from $35.6 million in previous year
-- Announces new expansion build in Washington D.C. metro area
and plans to expand in the Chicago metro area
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, 2005.
Revenues were $61.8 million for the fourth quarter and $221.1
million for the year ended December 31, 2005, representing a 6%
increase over the previous quarter, and a 35% increase over 2004
revenues. Recurring revenues, consisting primarily of colocation,
interconnection and managed services, were $58.4 million for the
quarter and $208.0 million for the year ended December 31, 2005, an 8%
increase over the previous quarter, and a 35% increase over 2004.
Non-recurring revenues for the fourth quarter were $3.4 million,
consisting primarily of professional services and installation fees.
Non-recurring revenues for the year ended December 31, 2005 were $13.1
million, consisting of $12.2 million of professional services and
installation fees, and $861,000 of customer settlements. Annual
non-recurring revenues, excluding customer settlements, increased 46%
year over year.
Note: 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, cash net income (loss), non-GAAP
net income (loss), free cash flow and adjusted free cash flow to
evaluate its operations. A reconciliation of these non-GAAP financial
measures to the most closely applicable GAAP financial measure are
attached to this release and commence at the bottom of our condensed
consolidated statements of operations -- GAAP presentation.
Cost of revenues were $41.7 million for the fourth quarter and
$158.4 million for the year ended December 31, 2005, representing a 2%
increase over the previous quarter, and a 16% increase over 2004 cost
of revenues. Cost of revenues, excluding depreciation, amortization,
accretion and stock-based compensation, were $25.2 million for the
fourth quarter and $95.6 million for the year ended December 31, 2005.
Cash gross margins, defined as gross profit less depreciation,
amortization, accretion and stock-based compensation, divided by
revenues, for the quarter were 59%, up from 57% the previous quarter.
Cash gross margins were 57% for 2005, up from 50% in 2004.
Selling, general and administrative expenses were $17.3 million
for the fourth quarter. Selling, general and administrative expenses,
excluding depreciation, amortization and stock-based compensation were
$14.8 million for the fourth quarter, a 2% decrease from the previous
quarter, and $55.4 million for 2005, a 21% increase over 2004.
The company was able to expand its IBX footprint by approximately
19% in 2005 through the acquisition of previously built-out data
centers in the Silicon Valley, Chicago and Los Angeles areas, all
scheduled to open around the first half of 2006. Equinix also acquired
the campus that houses its flagship Washington, D.C. area IBX center
for a total purchase price of $53.8 million. In fourth quarter,
Equinix completed transactions to purchase and finance its Washington,
D.C. area center, the sale and leaseback of its Los Angeles area
center, and the planned exit of its San Jose ground lease. The exit of
the San Jose ground lease resulted in the recognition of a
restructuring charge totaling $33.8 million in the quarter.
Net loss for the fourth quarter was $32.6 million, including
stock-based compensation expense of $2.0 million, and including the
restructuring charge of $33.8 million. This represents a basic and
diluted net loss per share of $1.25 on a weighted average share count
of 26.1 million. Net loss for the year ended December 31, 2005 was
$42.6 million, or a basic and diluted net loss per share of $1.78.
Excluding the restructuring charge and stock-based compensation, the
company was net income positive for the quarter, with a non-GAAP net
income of $3.2 million, a $7.7 million improvement over the same
quarter last year and $2.6 million improvement over the previous
quarter. The company's cash net income, defined as net income (loss)
less depreciation, amortization, accretion, stock-based compensation
expense, restructuring changes and non-cash interest expense for the
quarter was $20.5 million, a 19% improvement over the previous
quarter.
EBITDA, defined as loss from operations before depreciation,
amortization, accretion, stock-based compensation expense and
restructuring charges, was $21.8 million for the fourth quarter and
$70.1 million for the year ended December 31, 2005, an increase of 22%
over the previous quarter and up from $35.6 million in 2004, or a 60%
EBITDA flow-through rate in 2005.
Capital expenditures in the fourth quarter were $22.9 million, of
which $8.0 million was attributed to ongoing capital expenditures and
$14.9 million was attributed to expansion capital expenditures.
Capital expenditures for the year ended December 31, 2005 were $45.4
million, of which $19.7 million was attributed to ongoing capital
expenditures and $25.7 million was attributed to expansion capital
expenditures.
The Company generated cash from operating activities of $18.6
million for the fourth quarter as compared to $15.5 million in the
previous quarter. Cash generated from operating activities for the
year ended December 31, 2005 was $67.6 million as compared to $36.9
million in 2004. Cash used in investing activities was $65.9 million
in the fourth quarter as compared to $42.1 million in the previous
quarter. Cash used in investing activities for the year was $120.9
million, which includes the purchase of real estate properties, as
compared to $20.7 million in 2004. Adjusted free cash flow was $6.4
million in the fourth quarter and $35.2 million for the year ended
December 31, 2005. Adjusted free cash flow is defined as net cash
generated from operating activities less net cash used in investing
activities (excluding the purchases, sales and maturities of
short-term and long-term investments and the purchase and sale of real
estate).
As of December 31, 2005, the Company's cash, cash equivalents and
investments were $188.9 million, including the $30.0 million draw-down
under the Silicon Valley Bank revolving line of credit, an increase of
$80.8 million over the previous year. The draw down was repaid in full
in January 2006.
Other Company Developments & Metrics
-- On a same IBX basis (defined as IBX centers which have been
available for new customer installs for at least four full
quarters), revenues were $56.8 million; cost of revenues were
$35.9 million; cost of revenues, excluding depreciation,
amortization, accretion and stock-based compensation, were
$21.6 million and cash gross margins for the quarter were 62%.
EBITDA on a same IBX basis was $20.7 million. Included in the
same IBX results were certain selling, general and
administrative expenses related to costs for the filing of our
recent S-3 registration statement and certain severance
charges.
-- Equinix added 68 new customers in the fourth quarter and 287
customers for the year 2005, ending the year with 1,138 total
customers. Some of the customers added in the fourth quarter
include Cable & Wireless Global Ptd Ltd, Bausch & Lomb (HK)
Ltd, NTT Australia Pty Ltd, Nokia Japan, PNC Bank, Hotel
Booking Solutions, Inc. and Xanga. Over 50 percent of
Equinix's new bookings in the quarter came from existing
customers including Amazon.com, GE Capital, Goldman Sachs
Group, IBM, XM Satellite Radio and Yahoo!.
-- Based on a total cabinet capacity of approximately 26,200, the
number of cabinets billing as of December 31, 2005 was
approximately 14,100, up from approximately 13,700 the
previous quarter, and up from 11,100 as of December 31, 2004.
On a weighted average basis, the number of cabinets billing
was approximately 14,000 representing a utilization rate of
54%.
-- U.S. interconnection service revenues were 21% of U.S.
recurring revenues for the fourth quarter and 22% for the year
ended December 31, 2005. Interconnection services revenues
represent approximately 20% of total worldwide recurring
revenues for the year ended December 31, 2005. Equinix signed
additional customers on its new 10 Gigabit Ethernet service
including Akamai, Beyond the Network, Big Pipe and Cable and
Wireless.
-- The Company also announced that it will build out a new center
at its Washington, D.C. area campus to further expand its
Washington, D.C. area Internet Business Exchange(TM) (IBX(R))
center. Equinix also announced that it intends to expand in
the Chicago metro area and has identified a potential site and
commenced performing its due diligence for possible expansion.
Business Outlook
For the first quarter 2006, the company expects revenue to be in
the range of $63.5 to $64.5 million. Cash gross margins are expected
to be in the range of 57% to 59%. Cash selling, general and
administrative expenses are expected to approximate $15.0 million.
EBITDA is expected to be between $21.5 and $22.5 million. Net loss is
expected to range between $9.0 and $10.0 million including the impact
of approximately $10.0 million of stock-based compensation expense,
primarily related to the new stock-based compensation expensing
requirements. Net interest expense will approximate $2.0 million. The
weighted average shares outstanding will approximate 27.6 million.
Capital expenditures are expected to be approximately $30.0 to $35.0
million including between $24.0 and $27.0 million of expansion capital
expenditures.
For the full year of 2006, revenues are expected to be in the
range of $275.0 to $285.0 million. Cash gross margins are expected to
be in the range of 57%-59%. Cash selling, general and administrative
expenses are expected to be in the range of $60.0 to $64.0 million.
EBITDA is expected to be between $95.0 and $105.0 million. Capital
expenditures for 2006 are expected to be in a range of $95.0 to $100.0
million, comprised of approximately $20.0 million of ongoing capital
expenditures and approximately $75.0 to $80.0 million of expansion
capital expenditures for the new Chicago, Los Angeles, and Silicon
Valley expansions, as well as the expansion build out in the
Washington D.C. area campus announced today. We expect our adjusted
free cash flow to be in a range of breakeven to a negative $5.0
million for the year. Adjusted free cash flow is defined as net cash
generated from operating activities less net cash used in investing
activities (excluding the purchases, sales and maturities of
short-term and long-term investments, as well as purchases and sales
of real estate).
The company will discuss its results and guidance on its quarterly
conference call on Wednesday, February 8, 2006, at 5:30 p.m. ET (2:30
p.m. PT). To hear the conference call live, please dial 1-773-799-3263
(domestic and international) 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 beginning on Wednesday, February
8, 2006 at 7:30 p.m. (ET) by dialing 402-220-9685. 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 Internet Business Exchange(TM) (IBX(R)) centers in 11
markets in the U.S. and Asia, 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.
This press release contains forward-looking statements that
involve risks and uncertainties. Actual results may differ materially
from expectations discussed in such forward-looking statements.
Factors that might cause such differences include, but are not limited
to, the challenges of acquiring, operating and constructing IBX
centers and developing, deploying and delivering Equinix services; a
failure to receive significant revenue from customers in
recently-acquired data centers; failure to complete any financing
arrangements contemplated from time to time; competition from existing
and new competitors; the ability to generate sufficient cash flow or
otherwise obtain funds to repay new or outstanding indebtedness; the
loss or decline in business from our key customers and other risks
described from time to time in Equinix's filings with the Securities
and Exchange Commission. In particular, see Equinix's recent quarterly
and annual reports and registration statement on Form S-3 filed with
the Securities and Exchange Commission, copies of which are available
upon request from Equinix. Equinix does not assume any obligation to
update the forward-looking information contained in this press
release.
Equinix and IBX are registered trademarks of Equinix, Inc.
Internet Business Exchange is a trademark of Equinix, Inc.
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, cash net income (loss), non-GAAP
net income (loss), free cash flow and adjusted 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, restructuring charges and, with respect to 2004
results, the non-cash portion of loss on debt extinguishment and
conversion (there were no such charges or losses in 2005). 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 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 accretion expense, both as it relates to
its asset retirement obligations as well as its accrued restructuring
charge liability, as these expenses represent costs, which Equinix
believes are not meaningful in evaluating the Company's current
operations. Equinix excludes non-cash stock-based compensation expense
as it represents expense attributed to stock awards 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 2005 and 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 does not provide forward-looking guidance for certain
financial data, such as depreciation, amortization, accretion,
stock-based compensation (with respect to 2006), net income (loss)
from operations, interest income, cash generated from operating
activities and cash used in investing activities, and as a result, is
not able to provide a reconciliation of GAAP to non-GAAP financial
measures for forward-looking data. Equinix intends to calculate the
various non-GAAP financial measures in future periods consistent with
how it was calculated for the three and twelve months ended December
31, 2005 and 2004, presented within this press release.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION
(in thousands, except per share detail)
(unaudited)
Three Months Ended Twelve Months Ended
----------------------------- -------------------
December September December December December
31, 30, 31, 31, 31,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Recurring revenues $58,380 $54,291 $42,638 $208,003 $154,449
Non-recurring
revenues 3,418 3,805 2,351 13,054 9,222
--------- --------- --------- --------- ---------
Revenues 61,798 58,096 44,989 221,057 163,671
Cost of revenues 41,715 40,955 34,705 158,354 136,950
--------- --------- --------- --------- ---------
Gross profit 20,083 17,141 10,284 62,703 26,721
--------- --------- --------- --------- ---------
Operating expenses:
Sales and
marketing 5,759 4,829 5,106 20,552 18,604
General and
administrative 11,516 12,078 7,950 45,110 32,494
Restructuring
charges 33,814 - 17,685 33,814 17,685
--------- --------- --------- --------- ---------
Total operating
expenses 51,089 16,907 30,741 99,476 68,783
--------- --------- --------- --------- ---------
Income (loss) from
operations (31,006) 234 (20,457) (36,773) (42,062)
--------- --------- --------- --------- ---------
Interest and other
income (expense):
Interest income 940 1,075 472 3,584 1,291
Interest expense
and other (2,548) (1,928) (2,731) (8,880) (11,496)
Loss on debt
extinguishment
and conversion - - - - (16,211)
--------- --------- --------- --------- ---------
Total interest
and other, net (1,608) (853) (2,259) (5,296) (26,416)
--------- --------- --------- --------- ---------
Net loss before
income taxes (32,614) (619) (22,716) (42,069) (68,478)
Income taxes 10 (164) 47 (543) (153)
--------- --------- --------- --------- ---------
Net loss $(32,604) $(783) $(22,669) $(42,612) $(68,631)
========= ========= ========= ========= =========
Basic and diluted net
loss per share $(1.25) $(0.03) $(1.21) $(1.78) $(3.87)
========= ========= ========= ========= =========
Shares used in
computing basic and
diluted net loss per
share 26,100 24,076 18,766 23,956 17,719
========= ========= ========= ========= =========
- ----------------------------------------------------------------------
Non-GAAP net income
(loss) (1) $3,196 $575 $(4,536) $(521) $(33,268)
========= ========= ========= ========= =========
(1) Non-GAAP net income (loss) excludes stock-based compensation,
restructuring charges and the $16,211,000 loss on debt
extinguishment and conversion during the twelve months ended
December 31, 2004 as follows:
Net loss $(32,604) $(783) $(22,669) $(42,612) $(68,631)
Stock-based
compensation 1,986 1,358 448 8,277 1,467
Restructuring
charges 33,814 - 17,685 33,814 17,685
Loss on debt
extinguishment
and conversion - - - - 16,211
--------- --------- --------- --------- ---------
Non-GAAP net
income (loss) $3,196 $575 $(4,536) $(521) $(33,268)
========= ========= ========= ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
NON-GAAP PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
---------------------------- -------------------
December September December December December
31, 30, 31, 31, 31,
2005 2005 2004 2005 2004
--------- -------- --------- --------- ---------
Recurring revenues $58,380 $54,291 $42,638 $208,003 $154,449
Non-recurring revenues 3,418 3,805 2,351 13,054 9,222
--------- -------- --------- --------- ---------
Revenues (1) 61,798 58,096 44,989 221,057 163,671
Cash cost of
revenues (2) 25,192 25,119 20,928 95,557 82,438
--------- -------- --------- --------- ---------
Cash gross
profit (3) 36,606 32,977 24,061 125,500 81,233
--------- -------- --------- --------- ---------
Cash operating
expenses (4):
Cash sales and
marketing
expenses (5) 5,332 4,566 4,613 18,931 16,642
Cash general and
administrative
expenses (6) 9,446 10,492 7,085 36,430 28,977
--------- -------- --------- --------- ---------
Total cash
operating
expenses (7) 14,778 15,058 11,698 55,361 45,619
--------- -------- --------- --------- ---------
EBITDA (8) 21,828 17,919 12,363 70,139 35,614
--------- -------- --------- --------- ---------
Cash interest and
other income
(expense) (9):
Interest income 940 1,075 472 3,584 1,291
Cash interest
expense and
other (10) (2,324) (1,650) (972) (7,205) (3,691)
Cash loss on debt
extinguishment and
conversion (11) - - - - (2,505)
Income taxes 10 (164) 47 (543) (153)
--------- -------- --------- --------- ---------
Total cash
interest and
other, net (1,374) (739) (453) (4,164) (5,058)
--------- -------- --------- --------- ---------
Cash net income (12) $20,454 $17,180 $11,910 $65,975 $30,556
========= ======== ========= ========= =========
Cash gross margins(13) 59% 57% 53% 57% 50%
========= ======== ========= ========= =========
EBITDA flow-through
rate (14) 106% 33% 90% 60% 74%
========= ======== ========= ========= =========
- ----------------------
(1) The geographic split of our revenues is presented below:
U.S. revenues $53,463 $50,527 $38,705 $191,390 $141,598
Asia-Pacific revenues 8,335 7,569 6,284 29,667 22,073
--------- -------- --------- --------- ---------
Revenues $61,798 $58,096 $44,989 $221,057 $163,671
========= ======== ========= ========= =========
Revenues on a services basis is presented below:
Colocation $43,127 $40,138 $30,814 $152,606 $111,986
Interconnection 11,181 10,527 8,901 40,877 31,414
Managed infrastructure 3,760 3,626 2,923 14,208 11,049
Other 312 - - 312 -
--------- -------- --------- --------- ---------
Recurring revenues 58,380 54,291 42,638 208,003 154,449
Non-recurring revenues 3,418 3,805 2,351 13,054 9,222
--------- -------- --------- --------- ---------
Revenues $61,798 $58,096 $44,989 $221,057 $163,671
========= ======== ========= ========= =========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Revenues on a same
IBX versus new IBX basis is presented below:
Same IBX centers $56,752 $54,776 $43,165 $211,267 $157,656
New IBX centers 5,046 3,320 1,824 9,790 6,015
--------- -------- --------- --------- ---------
Revenues $61,798 $58,096 $44,989 $221,057 $163,671
========= ======== ========= ========= =========
(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 $41,715 $40,955 $34,705 $158,354 $136,950
Depreciation,
amortization and
accretion expense (16,523) (15,836) (13,777) (62,797) (54,477)
Stock-based
compensation expense - - - - (35)
--------- -------- --------- --------- ---------
Cash cost of
revenues $25,192 $25,119 $20,928 $95,557 $82,438
========= ======== ========= ========= =========
The geographic split of our cash cost of revenues is presented below:
U.S. cash cost of
revenues $20,954 $20,933 $16,962 $79,287 $67,702
Asia-Pacific cash cost
of revenues 4,238 4,186 3,966 16,270 14,736
--------- -------- --------- --------- ---------
Cash cost of
revenues $25,192 $25,119 $20,928$95,557 $82,438
========= ======== ========= ========= =========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Cost of revenues
and cash cost of revenues on a same IBX versus new IBX basis is
presented below:
Same IBX centers-cash
cost of revenues $21,605 $23,292 $18,703 $87,378 $74,647
Same IBX centers-
depreciation,
amortization and
accretion expense 14,277 14,031 13,312 56,687 53,255
Same IBX centers-
stock-based
compensation expense - - - - 35
--------- -------- --------- --------- ---------
Same IBX centers
cost of revenues 35,882 37,323 32,015 144,065 127,937
--------- -------- --------- --------- ---------
New IBX centers-cash
cost of revenues 3,587 1,827 2,225 8,179 7,791
New IBX centers-
depreciation,
amortization and
accretion expense 2,246 1,805 465 6,110 1,222
New IBX centers-stock-
based compensation
expense - - - - -
--------- -------- --------- --------- ---------
New IBX centers cost
of revenues 5,833 3,632 2,690 14,289 9,013
--------- -------- --------- --------- ---------
Cost of revenues $41,715 $40,955 $34,705 $158,354 $136,950
========= ======== ========= ========= =========
(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 $5,759 $4,829 $5,106 $20,552 $18,604
Depreciation and
amortization expense (15) (15) (484) (60) (1,902)
Stock-based
compensation expense (412) (248) (9) (1,561) (60)
--------- -------- --------- --------- ---------
Cash sales and
marketing expenses $5,332 $4,566 $4,613 $18,931 $16,642
========= ======== ========= ========= =========
(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 $11,516 $12,078 $7,950 $45,110 $32,494
Depreciation and
amortization expense (496) (476) (426) (1,964) (2,145)
Stock-based
compensation expense (1,574) (1,110) (439) (6,716) (1,372)
--------- -------- --------- --------- ---------
Cash general and
administrative
expenses $9,446 $10,492 $7,085 $36,430 $28,977
========= ======== ========= ========= =========
(7) Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and
marketing expenses $5,332 $4,566 $4,613 $18,931 $16,642
Cash general and
administrative
expenses 9,446 10,492 7,085 36,430 28,977
--------- -------- --------- --------- ---------
$14,778 $15,058 $11,698 $55,361 $45,619
========= ======== ========= ========= =========
The geographic split of our cash operating expenses, or cash SG&A, is
presented below:
U.S. cash SG&A $12,026 $12,338 $9,408 $44,758 $36,439
Asia-Pacific cash SG&A 2,752 2,720 2,290 10,603 9,180
--------- -------- --------- --------- ---------
Cash SG&A $14,778 $15,058 $11,698 $55,361 $45,619
========= ======== ========= ========= =========
(8) We define EBITDA as income (loss) from operations less
depreciation, amortization, accretion, stock-based compensation
expense and restructuring charges as presented below:
Income (loss) from
operations $(31,006) $234 $(20,457) $(36,773) $(42,062)
Depreciation,
amortization and
accretion expense 17,034 16,327 14,687 64,821 58,524
Stock-based
compensation expense 1,986 1,358 448 8,277 1,467
Restructuring charges 33,814 - 17,685 33,814 17,685
--------- -------- --------- --------- ---------
EBITDA $21,828 $17,919 $12,363 $70,139 $35,614
========= ======== ========= ========= =========
The geographic split of our EBITDA is presented below:
U.S. income (loss)
from operations $(31,504) $541 $(18,877) $(35,448) $(34,107)
U.S. depreciation,
amortization and
accretion expense 16,187 15,357 13,079 60,702 52,412
U.S. stock-based
compensation expense 1,986 1,358 448 8,277 1,467
U.S. restructuring
charges 33,814 - 17,685 33,814 17,685
--------- -------- --------- --------- ---------
U.S. EBITDA 20,483 17,256 12,335 67,345 37,457
--------- -------- --------- --------- ---------
Asia-Pacific income
(loss) from
operations 498 (307) (1,580) (1,325) (7,955)
Asia-Pacific
depreciation,
amortization and
accretion expense 847 970 1,608 4,119 6,112
Asia-Pacific stock-
based compensation
expense - - - - -
Asia-Pacific
restructuring charges - - - - -
--------- -------- --------- --------- ---------
Asia-Pacific EBITDA 1,345 663 28 2,794 (1,843)
--------- -------- --------- --------- ---------
EBITDA $21,828 $17,919 $12,363 $70,139 $35,614
========= ======== ========= ========= =========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. EBITDA on a same
IBX versus new IBX basis is presented below:
Same IBX centers-
income (loss) from
operations $(29,882) $1,008 $(19,533) $(31,061) $(38,925)
Same IBX centers-
depreciation,
amortization and
accretion expense 14,788 14,522 14,222 58,711 57,302
Same IBX centers-
stock-based
compensation expense 1,986 1,358 448 8,277 1,467
Same IBX centers-
restructuring charges 33,814 - 17,685 33,814 17,685
--------- -------- --------- --------- ---------
Same IBX center
EBITDA 20,706 16,888 12,822 69,741 37,529
--------- -------- --------- --------- ---------
New IBX centers-income
(loss) from
operations (1,124) (774) (924) (5,712) (3,137)
New IBX centers-
depreciation,
amortization and
accretion expense 2,246 1,805 465 6,110 1,222
New IBX centers-stock-
based compensation
expense - - - - -
New IBX centers-
restructuring charges - - - - -
--------- -------- --------- --------- ---------
New IBX center
EBITDA 1,122 1,031 (459) 398 (1,915)
--------- -------- --------- --------- ---------
EBITDA $21,828 $17,919 $12,363 $70,139 $35,614
========= ======== ========= ========= =========
(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 $(2,548) $(1,928) $(2,731) $(8,880) $(11,496)
Amortization of debt
discounts and debt
issuance costs 194 206 442 796 2,693
Non-cash interest on
convertible secured
notes 30 72 1,317 879 5,112
--------- -------- --------- --------- ---------
Non-cash interest
expense 224 278 1,759 1,675 7,805
--------- -------- --------- --------- ---------
Cash interest
expense and other $(2,324) $(1,650) $(972) $(7,205) $(3,691)
========= ======== ========= ========= =========
(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 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) $(32,604) $(783) $(22,669) $(42,612) $(68,631)
Depreciation,
amortization and
accretion expense 17,034 16,327 14,687 64,821 58,524
Stock-based
compensation expense 1,986 1,358 448 8,277 1,467
Restructuring charges 33,814 - 17,685 33,814 17,685
Non-cash interest
expense (defined
above) 224 278 1,759 1,675 7,805
Non-cash loss on debt
extinguishment and
conversion (defined
above) - - - - 13,706
--------- -------- --------- --------- ---------
Cash net income $20,454 $17,180 $11,910 $65,975 $30,556
========= ======== ========= ========= =========
Cash net income presents only our actual income taxes calculated on a
GAAP basis on our actual net income (loss). Cash net income does not
present additional pro forma income taxes on our substantially higher
non-GAAP cash net income.
(13) We define cash gross margins as cash gross profit divided by
revenues.
Our cash gross margins by geographic region is presented below:
U.S. cash gross
margins 61% 59% 56% 59% 52%
========= ======== ========= ========= =========
Asia-Pacific cash
gross margins 49% 45% 37% 45% 33%
========= ======== ========= ========= =========
Same IBX centers are IBX centers which have been available for
customer installs for at least four full quarters. Our cash gross
margins for same IBX centers is presented below:
Same IBX cash gross
margins 62% 57% 57% 59% 53%
========= ======== ========= ========= =========
(14) We define EBITDA flow-through rate as incremental adjusted EBITDA
growth divided by incremental revenue growth as follows:
EBITDA - current
period $21,828 $17,919 $12,363 $70,139 $35,614
Less EBITDA - prior
period (17,919) (16,055) (10,066) (35,614) (1,698)
--------- -------- --------- --------- ---------
EBITDA growth $3,909 $1,864 $2,297 $34,525 $33,916
========= ======== ========= ========= =========
Revenues - current
period $61,798 $58,096 $44,989 $221,057 $163,671
Less revenues - prior
period (58,096) (52,479) (42,439) (163,671) (117,942)
--------- -------- --------- --------- ---------
Revenue growth $3,702 $5,617 $2,550 $57,386 $45,729
========= ======== ========= ========= =========
EBITDA flow-through
rate 106% 33% 90% 60% 74%
========= ======== ========= ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets December 31, December 31,
2005 2004
-------------- --------------
Cash, cash equivalents and investments $188,855 $108,092
Accounts receivable, net 17,237 11,919
Property and equipment, net 438,790 343,361
Goodwill and other intangible assets, net 21,829 22,253
Debt issuance costs, net 3,075 3,164
Prepaid expenses 5,098 3,603
Deposits 3,548 6,062
Other assets 2,565 3,344
-------------- --------------
Total assets $680,997 $501,798
============== ==============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $22,557 $19,822
Accrued property and equipment 15,783 2,912
Accrued restructuring charges 49,831 14,750
Borrowings under credit line 30,000 -
Mortgage payable 60,000 -
Capital lease obligations 34,530 35,204
Other debt facilities 61,675 -
Convertible secured notes - 35,824
Convertible subordinated debentures 86,250 86,250
Deferred installation revenue 7,658 3,745
Customer deposits 1,188 3,360
Deferred rent 18,792 22,915
Asset retirement obligation 3,649 3,054
Other liabilities 411 256
-------------- --------------
Total liabilities 392,324 228,092
-------------- --------------
Preferred stock - 2
Common stock 27 19
Additional paid-in capital 839,497 776,123
Deferred stock-based compensation (4,930) (260)
Accumulated other comprehensive income 1,126 2,257
Accumulated deficit (547,047) (504,435)
-------------- --------------
Total stockholders' equity 288,673 273,706
-------------- --------------
Total liabilities and
stockholders' equity $680,997 $501,798
============== ==============
- -------------------------------------------------------
Ending headcount by geographic region is as follows:
U.S. headcount 372 315
Asia-pacific headcount 165 153
-------------- --------------
Total headcount 537 468
============== ==============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
----------------------------- -------------------
December September December December December
31, 30, 31, 31, 31,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Cash flows from
operating
activities:
Net loss $(32,604) $(783) $(22,669) $(42,612) $(68,631)
Adjustments to
reconcile net
loss to net cash
provided by
operating
activities:
Depreciation,
amortization and
accretion 17,034 16,327 14,687 64,821 58,524
Amortization of
stock-based
compensation 1,986 1,358 448 8,277 1,467
Non-cash interest
expense 224 278 1,759 1,675 7,805
Loss on debt
extinguishment
and conversion - - - - 16,211
Restructuring
charges 33,814 - 17,685 33,814 17,685
Other reconciling
items (507) 100 (524) 643 3,435
Changes in
operating assets
and liabilities:
Accounts
receivable (1,031) (75) 900 (4,854) (1,691)
Accounts
payable and
accrued
expenses (451) 1,189 (295) 3,690 2,608
Accrued
restructuring
charges (1,618) (480) - (3,066) (761)
Accrued
interest
payable 604 (539) 538 65 478
Other assets
and
liabilities 1,108 (1,881) (1,903) 5,142 (218)
--------- --------- --------- --------- ---------
Net cash
provided
by
operating
activities 18,559 15,494 10,626 67,595 36,912
--------- --------- --------- --------- ---------
Cash flows from
investing
activities:
Purchase of
Ashburn campus
property (53,759) - - (53,759) -
Purchase of Los
Angeles IBX
property (21) (34,727) - (34,748) -
Purchases of other
property and
equipment (22,920) (7,079) (6,151) (45,412) (22,934)
Accrued property
and equipment 10,626 (267) (93) 12,871 458
Other investing
activities 125 - 1,751 125 1,751
--------- --------- --------- --------- ---------
Net cash
used in
investing
activities (65,949) (42,073) (4,493) (120,923) (20,725)
--------- --------- --------- --------- ---------
Cash flows from
financing
activities:
Proceeds from
warrants, stock
options and
employee stock
purchase plans 1,772 3,585 3,658 12,989 7,289
Proceeds from
convertible
subordinated
debentures - - - - 86,250
Proceeds from
borrowing under
credit line 30,000 - - 30,000 -
Proceeds from Los
Angeles IBX
financing 38,142 - - 38,142 -
Proceeds from
mortgage payable 60,000 - - 60,000 -
Repayment of
capital lease
obligations (186) (167) (105) (675) (306)
Repayment of other
debt facilities (1,124) (34) - (4,848) (3,632)
Repayment of
credit facility - - - - (34,281)
Repayment of
senior notes - - - - (30,475)
Debt issuance and
extinguishment
costs (655) (342) (165) (997) (5,912)
--------- --------- --------- --------- ---------
Net cash
provided
by
financing
activities 127,949 3,042 3,388 134,611 18,933
--------- --------- --------- --------- ---------
Effect of foreign
currency exchange
rates on cash and
cash equivalents 6 (202) (242) (520) (305)
--------- --------- --------- --------- ---------
Net increase in cash,
cash equivalents and
investments 80,565 (23,739) 9,279 80,763 34,815
Cash, cash
equivalents and
investments at
beginning of period 108,290 132,029 98,813 108,092 72,971
--------- --------- --------- --------- ---------
Cash, cash
equivalents and
investments at end
of period $188,855 $108,290 $108,092 $188,855 $107,786
========= ========= ========= ========= =========
Free cash flow (2) $(47,390) $(26,579) $6,133 $(53,328) $16,187
========= ========= ========= ========= =========
Adjusted free cash
flow (3) $6,390 $8,148 $6,133 $35,179 $16,187
========= ========= ========= ========= =========
- ---------------------
(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 purchases, sales 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 operating
activities plus net cash used in investing activities (excluding
the purchases, sales and maturities of short-term and long- term
investments) as presented below:
Net cash provided by
operating activities
as presented above $18,559 $15,494 $10,626 $67,595 $36,912
Net cash used in
investing activities
as presented above (65,949) (42,073) (4,493) (120,923) (20,725)
--------- --------- --------- --------- ---------
Free cash flow $(47,390) $(26,579) $6,133 $(53,328) $16,187
========= ========= ========= ========= =========
(3) We define adjusted free cash flow as free cash flow (as defined
above) excluding any purchases or sales of real estate as
presented below:
Free cash flow (as
defined above) $(47,390) $(26,579) $6,133 $(53,328) $16,187
Less purchase of
Ashburn campus
property 53,759 - - 53,759 -
Less purchase of Los
Angeles IBX property 21 34,727 - 34,748 -
--------- --------- --------- --------- ---------
Adjusted free cash
flow $6,390 $8,148 $6,133 $35,179 $16,187
========= ========= ========= ========= =========
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