Exhibit 99.1
Equinix Reports Selected Second Quarter 2006 Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--Aug. 2, 2006--Equinix
(Nasdaq:EQIX):
-- Increased revenues to $68.5 million, a 6% increase over the
previous quarter and a 31% increase over the same quarter last
year
-- Announced record bookings in the quarter and signed 63 new
customers including Swiss Re Financial, United Stationers and
VeriSign
-- Completed 2006 planned expansions, opening Chicago, Los
Angeles and Silicon Valley area centers
-- Announces additional details on planned New York metro area
expansion
Equinix, Inc. (Nasdaq:EQIX), the leading provider of
network-neutral data centers and Internet exchange services, today
reported selected quarterly results for the period ended June 30,
2006.
Revenues were $68.5 million for the second quarter, a 6% increase
over the previous quarter and a 31% increase over the same quarter
last year. Recurring revenues, consisting primarily of colocation,
interconnection and managed services, were $65.1 million, a 5%
increase over the previous quarter and a 32% increase over the same
quarter last year. Non-recurring revenues were $3.4 million in the
quarter, consisting primarily of professional services and
installation fees.
"We continue to experience strong momentum across all areas of our
business," said Peter Van Camp, chairman and CEO, Equinix. "With high
levels of demand and a strong record of execution in completing our
2006 planned expansions, we continue to focus on the expansive
opportunity ahead of us."
As previously announced by Equinix on June 12, 2006, the Audit
Committee of Equinix's Board of Directors has been conducting an
independent investigation of Equinix's historical stock option
granting practices and related accounting with the assistance of
outside legal counsel. While the Audit Committee review is ongoing,
Equinix will not be able to provide detailed GAAP or non-GAAP
financials for the second quarter ended June 30, 2006. Equinix intends
to issue full results for the quarter as soon as practicable after the
review is complete.
Also previously announced on June 12, 2006, Equinix is currently
cooperating with the Securities and Exchange Commission (SEC)
regarding the SEC's informal inquiry requesting documents related to
Equinix's stock option grants and practices. Equinix had also
announced on June 29, 2006, that it received a grand jury subpoena
from the U.S. Attorney for the Northern District of California and is
cooperating fully with the U.S. Attorney's Office in connection with
this subpoena. The subpoena requests documents relating to Equinix's
stock option grants and practices.
Although the Audit Committee review is ongoing, the Audit
Committee has reached a preliminary conclusion that the actual
measurement dates of certain stock option grants issued in the past
differ from their recorded grant dates. Accordingly, Equinix currently
believes it will record additional non-cash stock-based compensation
expense but is not yet able to determine the amounts of such charges
or the resulting tax and accounting impact of these actions, or which
periods, if any, would require adjustment. Additionally, it is
Equinix's objective to support the completion of the Audit Committee's
review prior to the SEC due date for filing the Form 10-Q for the
quarter ended June 30, 2006, and to file its Form 10-Q in a timely
manner, including the five day extension period allowed through the
filing of a Form 12b-25. However, until the Audit Committee completes
its review, there can be no assurance that Equinix will not have to
restate its prior financial statements or that Equinix will be able to
file its Form 10-Q within the SEC's deadline.
Capital expenditures in the second quarter were $29.7 million, of
which $8.9 million was attributed to ongoing capital expenditures and
$20.8 million was attributed to expansion capital expenditures. In
addition, the Company also purchased the previously announced Chicago
IBX expansion property in the second quarter for $9.8 million, which
the Company paid for in full with cash in June 2006.
As of June 30, 2006, the Company's cash, cash equivalents and
investments were $147.9 million, as compared to $162.2 million in the
previous quarter.
Other Company Developments & Metrics
-- Equinix announced it has selected the location of its planned
expansion in the New York metro area. The high quality 330,000
square foot building, which is subject to additional due
diligence and final lease negotiations, is in close proximity
to its Secaucus, New Jersey IBX and will be built out in a
phased approach. The first phase is expected to open in the
second half of 2007 and will add between 1,600 to 1,800
sellable cabinets, generating approximately $40.0 million in
revenues at the midpoint. The capital investment for the first
phase is expected to range between $75.0 to $85.0 million, of
which approximately $5.0 million is expected to be incurred in
2006.
-- Equinix added 63 new customers in the quarter including The
Brookings Institution, Hanley Wood, Swiss Re Financial, United
Stationers, VeriSign and VSNL Singapore.
-- Over 50 percent of Equinix's new bookings in the quarter came
from existing customers including Edmunds.com, Electronic
Arts, Goldman Sachs, Salesforce.com, Sony Computer
Entertainment and YouTube.
-- Based on a total cabinet capacity of approximately 29,100, the
number of cabinets billing at the end of the quarter was
approximately 15,400, or 53%, up from approximately 14,750 the
previous quarter. On a weighted average basis, the number of
cabinets billing was approximately 15,100 representing a
utilization rate of 52%.
-- U.S. interconnection service revenues were 21% of U.S.
recurring revenues for the quarter. Interconnection services
represent greater than 19% of total worldwide recurring
revenues. Equinix signed additional customers on its new 10
Gigabit Ethernet service including British Telecom, Group
Telecom, Server Central and Telecom Italia.
Business Outlook
Equinix will be providing full guidance for the third quarter of
2006 and the full year, as soon as practicable once the Audit
Committee review is complete. For the full year of 2006, total
revenues are expected to be in the range of $280.0 to $286.0 million,
of which $72.0 to $73.0 million is expected in the third quarter.
EBITDA, a non-GAAP metric which excludes stock-based compensation
expense and other items as defined at the end of this press release,
for the year is expected to be $100.0 to $104.0 million. Capital
expenditures for 2006 are expected to be in a range of $180.0 to
$185.0 million, comprised of approximately $30.0 million of ongoing
capital expenditures, an increase of $5.0 million, and $150.0 to
$155.0 million of expansion capital expenditures for the build out of
the Chicago, Los Angeles and Silicon Valley expansions opened this
year, as well as the greenfield build outs in the Washington, D.C.,
Chicago and New York metro areas.
The Company will discuss its selected second quarter results on
Wednesday, August 2, 2006, at 5:30 p.m. ET (2:30 p.m. PT). To hear the
conference call live, please dial 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, August 2, 2006 at 7:30
p.m. (ET) by dialing 203-369-1919. 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.
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; the results of any
internal or regulatory review of past stock option grants and
practices or any litigation relating to such grants and practices; a
failure to file our quarterly reports with the SEC in a timely manner;
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 Measure
Equinix provided selected financial information 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, which the
Company defines as income or loss from operations before depreciation,
amortization, accretion, stock-based compensation expense and
restructuring charges. In presenting this non-GAAP financial measure,
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 and
restructuring charges. 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 IBX
expansion projects or acquired 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 measure, 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
liabilities, 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. 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. Management believes such restructuring
charges 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 a non-GAAP financial measure in isolation from, or as
a substitute for, financial information prepared in accordance with
GAAP. However, we have presented the non-GAAP financial measure 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
this non-GAAP financial measure provides consistency and comparability
with past reports and provides a better understanding of the overall
performance of the business and its ability to perform in subsequent
periods. Equinix believes that if it did not provide such non-GAAP
financial information, investors would not have all the necessary data
to analyze Equinix effectively.
Investors should note, however, that the non-GAAP financial
measure used by Equinix may not be the same non-GAAP financial
measure, and may not be calculated in the same manner, as that of
other companies.
Equinix does not provide forward-looking guidance for certain
financial data, such as depreciation, amortization, accretion, 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 prior periods.
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