Exhibit 99.1
Equinix Reports Second Quarter 2006 Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--Aug. 14, 2006--Equinix, Inc.
(Nasdaq:EQIX), the leading provider of network-neutral data centers
and Internet exchange services, today reported quarterly results for
the period ended June 30, 2006.
The independent review by the Audit Committee has been completed,
and, as originally disclosed on August 2, 2006, the Committee reached
the conclusion that the accounting measurement dates of certain stock
option grants issued in the past differ from their actual grant dates.
Accordingly, Equinix recorded an additional non-cash stock-based
compensation charge of $445,000 for the second quarter. The Audit
Committee concluded that the Company did not engage in intentional or
fraudulent misconduct in the granting of stock options. This one-time
charge, the cumulative effect for the correction of errors related to
prior periods, was not material to any particular prior quarter, and
thus there is no restatement to the Company's previously filed
financial statements. Also, the Company has filed its Form 10-Q for
the second quarter of 2006 today.
As reported August 2, 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.
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), 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 is attached to this release and commences at the
bottom of our condensed consolidated statements of operations -- GAAP
presentation.
Cost of revenues were $45.6 million for the second quarter,
including $963,000 of stock-based compensation, a 5% increase over the
previous quarter and a 17% increase over the same quarter last year.
Cost of revenues, excluding depreciation, amortization, accretion and
stock-based compensation of $18.8 million, were $26.8 million for the
second quarter, a 6% increase over the previous quarter and a 15%
increase over the same quarter last year. Cash gross margins, defined
as gross profit less depreciation, amortization, accretion and
stock-based compensation, divided by revenues, for the quarter were
61%, the same as the previous quarter and up from 56% the same quarter
last year.
Selling, general and administrative expenses were $26.2 million
for the second quarter, including $7.9 million of stock-based
compensation, an 8% increase over the previous quarter and a 62%
increase over the same quarter last year. Selling, general and
administrative expenses, excluding depreciation, amortization and
stock-based compensation of $8.5 million, were $17.7 million for the
second quarter, a 5% increase over the previous quarter and a 35%
increase over same quarter last year.
Net loss for the second quarter, including stock-based
compensation expense of $8.9 million, was $5.3 million. This
represents a basic and diluted net loss per share of $0.19 based on a
weighted average share count of 28.5 million. Excluding stock-based
compensation, the Company was net income positive for the second
quarter, with a non-GAAP net income of $3.6 million. This was a
$939,000 improvement from the previous quarter's result of $2.7
million and a $4.6 million improvement over the same quarter last
year.
EBITDA, defined as income or loss from operations before
depreciation, amortization, accretion, stock-based compensation
expense and restructuring charges, for the second quarter was $24.0
million, up 5% over the previous quarter and up from $16.1 million the
same quarter last year.
"We continue to experience strong momentum across all areas of our
business," said Peter Van Camp, chairman and CEO, Equinix. "We are
pleased the Audit Committee has completed the investigation and found
no intentional misconduct in our prior stock option grant practices.
We intend to continue to cooperate with the ongoing inquiries from the
SEC and DOJ."
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.
The Company generated cash from operating activities of $16.1
million as compared to $12.8 million in the previous quarter. Cash
used in investing activities was $35.8 million as compared to $24.1
million in the previous quarter. Adjusted free cash flow was a
negative $9.9 million in the second quarter. 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 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.
Business Outlook
For the third quarter 2006, revenues are expected to be in the
range of $72.0 to $73.0 million. Cash gross margins will be
approximately 60%. Cash selling, general and administrative expenses
are expected to be approximately $18.0 million. EBITDA for the third
quarter is expected to be approximately $25.0 million. Net loss is
expected to be approximately $6.0 million, including the impact of
approximately $8.0 million of stock-based compensation expense. Net
interest expense will be approximately $2.5 million. The weighted
average shares outstanding will be approximately 28.9 million. Capital
expenditures are expected to be approximately $55.0 to $60.0 million,
including $45.0 to $50.0 million of expansion capital expenditures.
For the full year of 2006, total revenues are expected to be in
the range of $280.0 to $286.0 million. Cash gross margins are expected
to be in the range of 60% to 61% including approximately $4.0 million
of net cash costs attributed to our expansion IBXs. Cash selling,
general and administrative expenses are expected to be in the range of
$68.0 to $70.0 million, including incremental professional fees
attributed to the stock option investigation. EBITDA 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 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 expansions in the
Washington, D.C., Chicago and New York metro areas.
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
regulatory review of past stock option grants and practices or any
litigation relating to such grants and practices; and other risks
described from time to time in Equinix's filings with the Securities
and Exchange Commission. In particular, see Equinix's recent quarterly
and annual reports filed with the Securities and Exchange Commission,
copies of which are available upon request from Equinix. Equinix does
not assume any obligation to update the forward-looking information
contained in this press release.
Equinix 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), 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 and restructuring charges. 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 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 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 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 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, 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 six months
ended June 30, 2006 and 2005, presented within this press release.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- GAAP PRESENTATION
(in thousands, except per share detail)
(unaudited)
Three Months Ended Six Months Ended
--------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
-------- --------- -------- --------- ---------
Recurring revenues $65,089 $ 61,752 $49,431 $126,841 $ 95,332
Non-recurring revenues 3,459 3,117 3,048 6,576 5,831
-------- --------- -------- --------- ---------
Revenues 68,548 64,869 52,479 133,417 101,163
Cost of revenues 45,563 43,345 38,811 88,908 75,684
-------- --------- -------- --------- ---------
Gross profit 22,985 21,524 13,668 44,509 25,479
-------- --------- -------- --------- ---------
Operating expenses:
Sales and marketing 8,480 7,198 5,145 15,678 9,964
General and
administrative 17,725 17,130 11,027 34,855 21,516
-------- --------- -------- --------- ---------
Total operating
expenses 26,205 24,328 16,172 50,533 31,480
-------- --------- -------- --------- ---------
Income (loss) from
operations (3,220) (2,804) (2,504) (6,024) (6,001)
-------- --------- -------- --------- ---------
Interest and other
income (expense):
Interest income 1,730 1,611 902 3,341 1,569
Interest expense
and other (3,565) (3,868) (1,945) (7,433) (4,404)
-------- --------- -------- --------- ---------
Total interest
and other, net (1,835) (2,257) (1,043) (4,092) (2,835)
-------- --------- -------- --------- ---------
Net loss before income
taxes and cumulative
effect of a change in
accounting principle (5,055) (5,061) (3,547) (10,116) (8,836)
Income taxes (215) (385) 116 (600) (389)
Net loss before
cumulative effect of -------- --------- -------- --------- ---------
a change in
accounting principle (5,270) (5,446) (3,431) (10,716) (9,225)
Cumulative effect
of a change in
accounting
principle - 376 - 376 -
-------- --------- -------- --------- ---------
Net loss $(5,270) $ (5,070) $(3,431) $(10,340) $ (9,225)
======== ========= ======== ========= =========
Net loss per share:
Basic and diluted net
loss per share before
cumulative effect of
a change in
accounting principle $ (0.19) $ (0.20) $ (0.14) $ (0.38) $ (0.40)
Cumulative effect of a
change in accounting
principle - 0.02 - 0.01 -
-------- --------- -------- --------- ---------
Basic and diluted net
loss per share $ (0.19) $ (0.18) $ (0.14) $ (0.37) $ (0.40)
======== ========= ======== ========= =========
Shares used in
computing basic and
diluted net loss per
share 28,468 27,848 23,727 28,160 22,964
======== ========= ======== ========= =========
- ----------------------------------------------------------------------
Non-GAAP net income
(loss) (1) $ 3,627 $ 2,688 $ (942) $ 6,315 $ (4,292)
======== ========= ======== ========= =========
(1)Non-GAAP net income (loss) excludes stock-based
compensation and restructuring charges as follows:
Net loss $(5,270) $ (5,070) $(3,431) $(10,340) $ (9,225)
Stock-based
compensation 8,897 7,758 2,489 16,655 4,933
Restructuring
charges - - - - -
-------- --------- -------- --------- ---------
Non-GAAP net
income (loss) $ 3,627 $ 2,688 $ (942) $ 6,315 $ (4,292)
======== ========= ======== ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- NON-GAAP
PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
----------------------------- --------------------
June 30, March 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
--------- --------- --------- ---------- ---------
Recurring revenues $ 65,089 $ 61,752 $ 49,431 $ 126,841 $ 95,332
Non-recurring
revenues 3,459 3,117 3,048 6,576 5,831
--------- --------- --------- ---------- ---------
Revenues (1) 68,548 64,869 52,479 133,417 101,163
Cash cost of
revenues (2) 26,845 25,272 23,317 52,117 45,246
--------- --------- --------- ---------- ---------
Cash gross
profit (3) 41,703 39,597 29,162 81,300 55,917
--------- --------- --------- ---------- ---------
Cash operating
expenses (4):
Cash sales and
marketing
expenses (5) 6,333 5,291 4,676 11,624 9,033
Cash general and
administrative
expenses (6) 11,332 11,471 8,431 22,803 16,492
--------- --------- --------- ---------- ---------
Total cash
operating
expenses (7) 17,665 16,762 13,107 34,427 25,525
--------- --------- --------- ---------- ---------
EBITDA (8) $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
Cash gross margins
(9) 61% 61% 56% 61% 55%
========= ========= ========= ========== =========
EBITDA flow-through
rate (10) 33% 33% 45% 53% 58%
========= ========= ========= ========== =========
- -------------------
(1) The geographic split of our revenues is presented below:
U.S. revenues $ 58,900 $ 55,840 $ 45,384 $ 114,741 $ 87,400
Asia-Pacific
revenues 9,648 9,029 7,095 18,676 13,763
--------- --------- --------- ---------- ---------
Revenues $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
========= ========= ========= ========== =========
Revenues on a services basis is presented below:
Colocation $ 47,988 $ 45,569 $ 36,105 $ 93,557 $ 69,341
Interconnection 12,644 11,804 9,845 24,448 19,169
Managed
infrastructure 4,046 3,933 3,481 7,979 6,822
Rental 411 446 - 857 -
--------- --------- --------- ---------- ---------
Recurring
revenues 65,089 61,752 49,431 126,841 95,332
Non-recurring
revenues 3,459 3,117 3,048 6,576 5,831
--------- --------- --------- ---------- ---------
Revenues $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
========= ========= ========= ========== =========
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 $ 68,190 $ 62,530 $ 51,282 $ 130,720 $ 99,739
New IBX centers 358 2,339 1,197 2,697 1,424
--------- --------- --------- ---------- ---------
Revenues $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
========= ========= ========= ========== =========
(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 $ 45,563 $ 43,345 $ 38,811 $ 88,908 $ 75,684
Depreciation,
amortization
and accretion
expense (17,755) (17,315) (15,494) (35,070) (30,438)
Stock-based
compensation
expense (963) (758) - (1,721) -
--------- --------- --------- ---------- ---------
Cash cost
of
revenues $ 26,845 $ 25,272 $ 23,317 $ 52,117 $ 45,246
========= ========= ========= ========== =========
The geographic split of our cash cost of revenues is presented
below:
U.S. cash cost
of revenues $ 22,312 $ 20,951 $ 19,339 $ 43,263 $ 37,400
Asia-Pacific
cash cost of
revenues 4,533 4,321 3,978 8,854 7,846
--------- --------- --------- ---------- ---------
Cash cost
of
revenues $ 26,845 $ 25,272 $ 23,317 $ 52,117 $ 45,246
========= ========= ========= ========== =========
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 $ 24,849 $ 22,476 $ 21,390 $ 47,325 $ 42,481
Same IBX
centers-
depreciation,
amortization
and accretion
expense 16,433 15,532 14,183 31,965 28,379
Same IBX
centers-stock-
based
compensation
expense 963 758 - 1,721 -
--------- --------- --------- ---------- ---------
Same IBX
centers
cost of
revenues 42,245 38,766 35,573 81,011 70,860
--------- --------- --------- ---------- ---------
New IBX
centers-cash
cost of
revenues 1,996 2,796 1,927 4,792 2,765
New IBX
centers-
depreciation,
amortization
and accretion
expense 1,322 1,783 1,311 3,105 2,059
New IBX
centers-stock-
based
compensation
expense - - - - -
--------- --------- --------- ---------- ---------
New IBX
centers cost
of revenues 3,318 4,579 3,238 7,897 4,824
--------- --------- --------- ---------- ---------
Cost of
revenues $ 45,563 $ 43,345 $ 38,811 $ 88,908 $ 75,684
========= ========= ========= ========== =========
(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 $ 8,480 $ 7,198 $ 5,145 $ 15,678 $ 9,964
Depreciation
and
amortization
expense (15) (15) (15) (30) (30)
Stock-based
compensation
expense (2,132) (1,892) (454) (4,024) (901)
--------- --------- --------- ---------- ---------
Cash sales
and
marketing
expenses $ 6,333 $ 5,291 $ 4,676 $ 11,624 $ 9,033
========= ========= ========= ========== =========
(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 $ 17,725 $ 17,130 $ 11,027 $ 34,855 $ 21,516
Depreciation
and
amortization
expense (591) (551) (561) (1,142) (992)
Stock-based
compensation
expense (5,802) (5,108) (2,035) (10,910) (4,032)
--------- --------- --------- ---------- ---------
Cash
general
and
adminis-
trative
expenses $ 11,332 $ 11,471 $ 8,431 $ 22,803 $ 16,492
========= ========= ========= ========== =========
(7) Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and
marketing
expenses $ 6,333 $ 5,291 $ 4,676 $ 11,624 $ 9,033
Cash general
and adminis-
trative
expenses 11,332 11,471 8,431 22,803 16,492
--------- --------- --------- ---------- ---------
Cash SG&A $ 17,665 $ 16,762 $ 13,107 $ 34,427 $ 25,525
========= ========= ========= ========== =========
The geographic split of our cash operating expenses, or cash
SG&A, is presented below:
U.S. cash SG&A $ 14,599 $ 13,327 $ 10,486 $ 27,926 $ 20,394
Asia-Pacific
cash SG&A 3,066 3,435 2,621 6,501 5,131
--------- --------- --------- ---------- ---------
Cash SG&A $ 17,665 $ 16,762 $ 13,107 $ 34,427 $ 25,525
========= ========= ========= ========== =========
(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 $ (3,220) $ (2,804) $ (2,504) $ (6,024) $ (6,001)
Depreciation,
amortization
and accretion
expense 18,361 17,881 16,070 36,242 31,460
Stock-based
compensation
expense 8,897 7,758 2,489 16,655 4,933
Restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
EBITDA $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
The geographic split of our EBITDA is presented below:
U.S. income
(loss) from
operations $ (3,404) $ (2,247) $ (1,871) $ (5,651) $ (4,485)
U.S.
depreciation,
amortization
and accretion
expense 17,419 16,866 14,941 34,285 29,158
U.S. stock-
based
compensation
expense 7,975 6,943 2,489 14,918 4,933
U.S.
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
U.S. EBITDA 21,990 21,562 15,559 43,552 29,606
--------- --------- --------- ---------- ---------
Asia-Pacific
income (loss)
from
operations 184 (557) (633) (373) (1,516)
Asia-Pacific
depreciation,
amortization
and accretion
expense 942 1,015 1,129 1,957 2,302
Asia-Pacific
stock-based
compensation
expense 922 815 - 1,737 -
Asia-Pacific
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
Asia-
Pacific
EBITDA 2,048 1,273 496 3,321 786
--------- --------- --------- ---------- ---------
EBITDA $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
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 $ 76 $ (368) $ (232) $ (292) $ (2,187)
Same IBX
centers-
depreciation,
amortization
and accretion
expense 17,039 16,098 14,759 33,137 29,401
Same IBX
centers-stock-
based
compensation
expense 8,897 7,758 2,489 16,655 4,933
Same IBX
centers-
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
Same IBX
center
EBITDA 26,012 23,488 17,016 49,500 32,147
--------- --------- --------- ---------- ---------
New IBX
centers-income
(loss) from
operations (3,296) (2,436) (2,272) (5,732) (3,814)
New IBX
centers-
depreciation,
amortization
and accretion
expense 1,322 1,783 1,311 3,105 2,059
New IBX
centers-stock-
based
compensation
expense - - - - -
New IBX
centers-
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
New IBX
center
EBITDA (1,974) (653) (961) (2,627) (1,755)
--------- --------- --------- ---------- ---------
EBITDA $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
(9) 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 62% 62% 57% 62% 57%
========= ========= ========= ========== =========
Asia-Pacific
cash gross
margins 53% 52% 44% 53% 43%
========= ========= ========= ========== =========
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 64% 64% 58% 64% 57%
========= ========= ========= ========== =========
(10) We define EBITDA flow-through rate as incremental EBITDA growth
divided by incremental revenue growth as follows:
EBITDA --
current period $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
Less EBITDA --
prior period (22,835) (21,828) (14,337) (39,747) (22,429)
--------- --------- --------- ---------- ---------
EBITDA
growth $ 1,203 $ 1,007 $ 1,718 $ 7,126 $ 7,963
========= ========= ========= ========== =========
Revenues --
current period $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
Less revenues
-- prior
period (64,869) (61,798) (48,684) (119,894) (87,428)
--------- --------- --------- ---------- ---------
Revenue
growth $ 3,679 $ 3,071 $ 3,795 $ 13,523 $ 13,735
========= ========= ========= ========== =========
EBITDA flow-
through rate 33% 33% 45% 53% 58%
========= ========= ========= ========== =========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets June 30, December 31,
2006 2005
------------ ------------
Cash, cash equivalents and investments $ 147,939 $ 188,855
Accounts receivable, net 23,347 17,237
Property and equipment, net 471,765 438,790
Goodwill and other intangible assets, net 23,485 21,829
Debt issuance costs, net 2,659 3,075
Prepaid expenses 4,900 5,098
Deposits 6,641 3,548
Other assets 2,437 2,565
------------ ------------
Total assets $ 683,173 $ 680,997
============ ============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 23,582 $ 22,557
Accrued property and equipment 21,938 15,783
Accrued restructuring charges 45,350 49,831
Borrowings under credit line - 30,000
Capital lease obligations 34,130 34,530
Other financing obligations 61,336 61,675
Mortgage payable 59,484 60,000
Convertible subordinated debentures 86,250 86,250
Deferred installation revenue 7,573 7,658
Customer deposits 785 1,188
Deferred rent 21,152 18,792
Asset retirement obligations 3,904 3,649
Other liabilities 562 411
------------ ------------
Total liabilities 366,046 392,324
------------ ------------
Common stock 29 27
Additional paid-in capital 871,999 839,497
Deferred stock-based compensation - (4,930)
Accumulated other comprehensive income 2,486 1,126
Accumulated deficit (557,387) (547,047)
------------ ------------
Total stockholders' equity 317,127 288,673
------------ ------------
Total liabilities and stockholders'
equity $ 683,173 $ 680,997
============ ============
- --------------------------------------------------------- ------------
Ending headcount by geographic region is as
follows:
U.S. headcount 402 372
Asia-pacific headcount 169 165
------------ ------------
Total headcount 571 537
============ ============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
----------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
--------- --------- --------- --------- ---------
Cash flows from
operating
activities:
Net loss $ (5,270) $ (5,070) $ (3,431) $(10,340) $ (9,225)
Adjustments to
reconcile net
loss to net cash
provided by
operating
activities:
Depreciation,
amortization
and accretion 18,361 17,881 16,070 36,242 31,460
Stock-based
compensation 8,897 7,758 2,489 16,655 4,933
Non-cash
interest
expense 208 208 268 416 1,173
Restructuring
charges - - - - -
Other
reconciling
items (64) (727) 6 (791) (49)
Changes in
operating
assets and
liabilities:
Accounts
receivable (5,011) (1,251) (1,484) (6,262) (3,748)
Accounts
payable and
accrued
expenses 2,597 (993) 3,402 1,604 2,952
Accrued
restructuring
charges (3,168) (2,957) (486) (6,125) (968)
Other assets
and
liabilities (443) (2,058) 1,315 (2,501) 7,014
--------- --------- --------- --------- ---------
Net cash
provided
by
operating
activities 16,107 12,791 18,149 28,898 33,542
--------- --------- --------- --------- ---------
Cash flows from
investing
activities:
Purchase of
Ashburn campus
property - - - - -
Purchase of Los
Angeles IBX
property - - - - -
Purchase of
Chicago IBX
property (9,766) - - (9,766) -
Purchases of
other property
and equipment (29,671) (26,613) (9,890) (56,284) (15,413)
Accrued property
and equipment 3,643 2,512 3,155 6,155 2,512
Other investing
activities - 6 - 6 -
--------- --------- --------- --------- ---------
Net cash
used in
investing
activities (35,794) (24,095) (6,735) (59,889) (12,901)
--------- --------- --------- --------- ---------
Cash flows from
financing
activities:
Proceeds from
warrants, stock
options
and employee
stock purchase
plans 5,862 14,714 3,285 20,576 7,632
Repayment of
borrowings under
credit line - (30,000) - (30,000) -
Repayment of
capital lease
obligations (201) (197) (163) (398) (322)
Repayment of
other financing
obligations (174) (167) (627) (341) (3,690)
Repayment of
mortgage payable (311) (205) - (516) -
Other financing
activities 200 370 - 570 -
--------- --------- --------- --------- ---------
Net cash
provided
by (used
in)
financing
activities 5,376 (15,485) 2,495 (10,109) 3,620
--------- --------- --------- --------- ---------
Effect of foreign
currency exchange
rates on cash and
cash equivalents 27 157 (16) 184 (324)
--------- --------- --------- --------- ---------
Net increase
(decrease) in cash,
cash equivalents
and investments (14,284) (26,632) 13,893 (40,916) 23,937
Cash, cash
equivalents and
investments at
beginning of period 162,223 188,855 118,136 188,855 108,092
--------- --------- --------- --------- ---------
Cash, cash
equivalents and
investments at end
of period $147,939 $162,223 $132,029 $147,939 $132,029
========= ========= ========= ========= =========
Free cash flow (2) $(19,687) $(11,304) $ 11,414 $(30,991) $ 20,641
========= ========= ========= ========= =========
Adjusted free cash
flow (3) $ (9,921) $(11,304) $ 11,414 $(21,225) $ 20,641
========= ========= ========= ========= =========
- --------------------
(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 $ 16,107 $ 12,791 $ 18,149 $ 28,898 $ 33,542
Net cash used in
investing
activities as
presented above (35,794) (24,095) (6,735) (59,889) (12,901)
--------- --------- --------- --------- ---------
Free cash flow $(19,687) $(11,304) $ 11,414 $(30,991) $ 20,641
========= ========= ========= ========= =========
(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) $(19,687) $(11,304) $ 11,414 $(30,991) $ 20,641
Less purchase of
Chicago IBX
property 9,766 - - 9,766 -
--------- --------- --------- --------- ---------
Adjusted free
cash flow $ (9,921) $(11,304) $ 11,414 $(21,225) $ 20,641
========= ========= ========= ========= =========
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