Exhibit 99.1
Equinix Reports Third Quarter 2006 Results
-- Increased revenues to $73.7 million, an 8% increase over the previous
quarter and a 27% increase over the same quarter last year
-- Raises 2006 annual revenue guidance to $286.0 to $287.0 million and
narrows EBITDA guidance to $102.0 to $103.0 million; announces 2007
annual revenue guidance of $352.0 to $362.0 million and EBITDA
guidance of $137.0 to $143.0 million
-- Signed 92 new customers including Acer Computers, Barnes and Noble
College Booksellers, Coram and Fannie Mae
FOSTER CITY, Calif.--(BUSINESS WIRE)--Oct. 25, 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
September 30, 2006.
Revenues were $73.7 million for the third quarter, a 27% increase over the
same quarter last year and an 8% increase over the previous quarter. Recurring
revenues, consisting primarily of colocation, interconnection and managed
services, were $69.9 million, a 29% increase over the same quarter last year and
a 7% increase over the previous quarter. Non-recurring revenues were $3.8
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 $49.1 million for the third quarter, including
$664,000 of stock-based compensation, an 8% increase over the previous quarter
and a 20% increase over the same quarter last year. Cost of revenues, excluding
depreciation, amortization, accretion and stock-based compensation of $19.4
million, were $29.7 million for the third quarter, an 11% increase over the
previous quarter and an 18% 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 60%, down
from 61% the previous quarter and up from 57% the same quarter last year. On a
same IBX basis (defined as IBX centers which have been available for new
customer installs for at least four full quarters), cash gross margins were 63%.
Selling, general and administrative expenses were $26.1 million for the
third quarter, including $6.2 million of stock-based compensation, approximately
the same as the previous quarter and a 55% increase over the same quarter last
year. Selling, general and administrative expenses, excluding depreciation,
amortization and stock-based compensation of $7.1 million, were $19.0 million
for the third quarter, an 8% increase over the previous quarter and a 27%
increase over same quarter last year. Selling, general and administrative
expenses included $1.2 million in costs incurred in the quarter related to the
audit committee's independent investigation of the Company's stock options
practices, of which approximately $600,000 was greater than anticipated.
The Company recorded an adjustment to the $17.7 million restructuring
charge that the Company recorded in the fourth quarter of 2004 and increased the
restructuring charge by $1.5 million in the third quarter of 2006. The $1.5
million increase in the restructuring charge was a result of revised sublease
assumptions related to the two leases covered under the 2004 restructuring
charge that the Company is contractually committed to through 2015.
Net loss for the third quarter was $5.2 million, including stock-based
compensation expense of $6.9 million and the restructuring charge of $1.5
million. This represents a basic and diluted net loss per share of $0.18 based
on a weighted average share count of 28.7 million. Excluding stock-based
compensation and the restructuring charge, the Company was net income positive
for the third quarter, with a non-GAAP net income of $3.2 million. This was a
$383,000 decrease from the previous quarter's result of $3.6 million and a $2.7
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 third quarter was $24.9 million, up from $24.0 million the
previous quarter and up from $17.9 million the same quarter last year. As
mentioned above, this result included $1.2 million in costs incurred within the
quarter for the audit committee's independent investigation of the Company's
stock options practices, of which approximately $600,000 was not anticipated.
"With good visibility to the completion of 2006, it's been another strong
year of growth for the Company," said Peter Van Camp, chairman and CEO, Equinix.
"Our business execution, expansion program, and momentum as we exit the year
provide a solid foundation to continue to build on our market leadership
position in 2007."
Capital expenditures in the third quarter were $46.6 million, of which $7.0
million was attributed to ongoing capital expenditures and $39.6 million was
attributed to expansion capital expenditures.
The Company generated cash from operating activities of $20.7 million as
compared to $16.1 million in the previous quarter. Cash used in investing
activities was $50.0 million as compared to $35.8 million in the previous
quarter. Adjusted free cash flow was a negative $29.3 million in the third
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 September 30, 2006, the Company's cash, cash equivalents and
investments were $166.3 million, as compared to $147.9 million in the previous
quarter. In September 2006, the Company drew down $40.0 million from its Silicon
Valley Bank credit line, which was repaid in full in October 2006.
Other Company Developments & Metrics
-- As referenced in a separate press release today, Equinix has announced
that Peter Van Camp will transition from his role as chairman and CEO
of Equinix to Executive Chairman once a new CEO has been appointed
over the course of the next year. Until this time, Mr. Van Camp will
remain fully engaged as CEO and chairman.
-- 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 $71.6 million; cost of revenues were $43.5 million; cost of
revenues, excluding depreciation, amortization, accretion and
stock-based compensation, were $26.4 million and cash gross margins
for the quarter were 63%. EBITDA on a same IBX basis was $26.6
million.
-- Equinix added 92 new customers in the quarter including Acer
Computers, Barnes and Noble College Booksellers, Coram, Fannie Mae and
Shopzilla.
-- Based on a total cabinet capacity of approximately 30,900, the number
of cabinets billing at the end of the quarter was approximately
16,200, or 52%, up from approximately 15,400 the previous quarter. On
a weighted average basis, the number of cabinets billing was
approximately 16,200 representing a utilization rate of 52%.
-- U.S. interconnection service revenues were 22% of U.S. recurring
revenues for the quarter. Interconnection services represent
approximately 20% of total worldwide recurring revenues.
-- Washington, D.C. metro area IBX greenfield project is targeted to open
in January of 2007, with customer installations expected to commence
in February 2007.
Business Outlook
For the full year of 2006, total revenues are expected to be in the range
of $286.0 to $287.0 million. Total year 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 $70.0 to $71.0 million, including an
estimated $2.7 million of incremental professional fees attributed to the stock
option investigation. EBITDA for the year is expected to be $102.0 to $103.0
million. Net loss is expected to be in a range of $15.0 to $16.0 million,
including the restructuring charge of $1.5 million and the impact of
approximately $30.0 million of stock-based compensation expense. Net interest
expense will be approximately $8.0 million. The weighted average shares
outstanding will be approximately 28.5 million. Capital expenditures for 2006
are expected to be in a range of $175.0 to $180.0 million, comprised of
approximately $32.0 million of ongoing capital expenditures and $143.0 to $148.0
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.
For 2007, total revenues are expected to be in the range of $352.0 to
$362.0 million. EBITDA for the year is expected to be between $137.0 and $143.0
million, including $6.0 million of net costs related to the Company's expansion
projects. Capital expenditures for 2007 are expected to be in a range of $230.0
to $245.0 million, comprised of approximately $30.0 million of ongoing capital
expenditures and $200.0 to $215.0 million of expansion capital expenditures.
This includes approximately $10.0 million of expansion capital expenditures
shifted from 2006 to 2007 specifically related to the Chicago Greenfield
project.
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; failure to receive the proceeds from our loan
commitments as expected; failure to increase the debt financing on our
Washington, D.C. area campus as expected; 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 nine months
ended September 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 Nine Months Ended
---------------------------- -------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
--------- -------- --------- --------- ---------
Recurring revenues $ 69,918 $65,089 $ 54,291 $196,759 $149,623
Non-recurring
revenues 3,808 3,459 3,805 10,384 9,636
--------- -------- --------- --------- ---------
Revenues 73,726 68,548 58,096 207,143 159,259
Cost of revenues 49,137 45,563 40,955 138,045 116,639
--------- -------- --------- --------- ---------
Gross profit 24,589 22,985 17,141 69,098 42,620
--------- -------- --------- --------- ---------
Operating expenses:
Sales and
marketing 7,502 8,480 4,829 23,180 14,793
General and
administrative 18,631 17,725 12,078 53,486 33,594
Restructuring
charges 1,527 - - 1,527 -
--------- -------- --------- --------- ---------
Total operating
expenses 27,660 26,205 16,907 78,193 48,387
--------- -------- --------- --------- ---------
Income (loss) from
operations (3,071) (3,220) 234 (9,095) (5,767)
--------- -------- --------- --------- ---------
Interest and other
income (expense):
Interest income 1,724 1,730 1,075 5,065 2,644
Interest expense
and other (3,551) (3,565) (1,928) (10,984) (6,332)
--------- -------- --------- --------- ---------
Total interest
and other, net (1,827) (1,835) (853) (5,919) (3,688)
--------- -------- --------- --------- ---------
Net loss before
income taxes and
cumulative effect of
a change in
accounting principle (4,898) (5,055) (619) (15,014) (9,455)
Income taxes (270) (215) (164) (870) (553)
Net loss before
cumulative effect of --------- -------- --------- --------- ---------
a change in
accounting principle (5,168) (5,270) (783) (15,884) (10,008)
Cumulative
effect of a
change in
accounting
principle - - - 376 -
--------- -------- --------- --------- ---------
Net loss $ (5,168) $(5,270) $ (783) $(15,508) $(10,008)
========= ======== ========= ========= =========
Net loss per share:
Basic and diluted net
loss per share
before cumulative
effect of a change
in accounting
principle $ (0.18) $ (0.19) $ (0.03) $ (0.56) $ (0.43)
Cumulative effect of
a change in
accounting principle - - - 0.01 -
--------- -------- --------- --------- ---------
Basic and diluted net
loss per share $ (0.18) $ (0.19) $ (0.03) $ (0.55) $ (0.43)
========= ======== ========= ========= =========
Shares used in
computing basic and
diluted net loss per
share 28,743 28,468 24,076 28,356 23,335
========= ======== ========= ========= =========
- ----------------------------------------------------------------------
Non-GAAP net income
(loss) (1) $ 3,244 $ 3,627 $ 575 $ 9,559 $ (3,717)
========= ======== ========= ========= =========
(1) Non-GAAP net income (loss) excludes stock-based compensation and
restructuring charges as follows:
Net loss $ (5,168) $(5,270) $ (783) $(15,508) $(10,008)
Stock-based
compensation 6,885 8,897 1,358 23,540 6,291
Restructuring
charges 1,527 - - 1,527 -
--------- -------- --------- --------- ---------
Non-GAAP net
income (loss) $ 3,244 $ 3,627 $ 575 $ 9,559 $ (3,717)
========= ======== ========= ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP
PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------- ---------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
--------- --------- --------- ---------- ----------
Recurring revenues $ 69,918 $ 65,089 $ 54,291 $ 196,759 $ 149,623
Non-recurring
revenues 3,808 3,459 3,805 10,384 9,636
--------- --------- --------- ---------- ----------
Revenues (1) 73,726 68,548 58,096 207,143 159,259
Cash cost of
revenues (2) 29,738 26,845 25,119 81,855 70,365
--------- --------- --------- ---------- ----------
Cash gross
profit (3) 43,988 41,703 32,977 125,288 88,894
--------- --------- --------- ---------- ----------
Cash operating
expenses (4):
Cash sales and
marketing
expenses(5) 5,864 6,333 4,566 17,488 13,599
Cash general
and
administrative
expenses (6) 13,197 11,332 10,492 36,000 26,984
--------- --------- --------- ---------- ----------
Total cash
operating
expenses (7) 19,061 17,665 15,058 53,488 40,583
--------- --------- --------- ---------- ----------
EBITDA (8) $ 24,927 $ 24,038 $ 17,919 $ 71,800 $ 48,311
========= ========= ========= ========== ==========
Cash gross margins
(9) 60% 61% 57% 60% 56%
========= ========= ========= ========== ==========
EBITDA flow-through
rate (10) 17% 33% 33% 46% 57%
========= ========= ========= ========== ==========
- -------------------
(1)The geographic split of our revenues is presented below:
U.S. revenues $ 63,654 $ 58,900 $ 50,527 $ 178,394 $ 137,927
Asia-Pacific
revenues 10,072 9,648 7,569 28,749 21,332
--------- --------- --------- ---------- ----------
Revenues $ 73,726 $ 68,548 $ 58,096 $ 207,143 $ 159,259
========= ========= ========= ========== ==========
Revenues on a services basis is presented below:
Colocation $ 51,678 $ 47,988 $ 40,138 $ 145,235 $ 109,479
Interconnection 13,862 12,644 10,527 38,310 29,696
Managed
infrastructure 4,066 4,046 3,626 12,045 10,448
Rental 312 411 - 1,169 -
--------- --------- --------- ---------- ----------
Recurring
revenues 69,918 65,089 54,291 196,759 149,623
Non-recurring
revenues 3,808 3,459 3,805 10,384 9,636
--------- --------- --------- ---------- ----------
Revenues $ 73,726 $ 68,548 $ 58,096 $ 207,143 $ 159,259
========= ========= ========= ========== ==========
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 $ 71,572 $ 68,190 $ 54,776 $ 202,292 $ 154,515
New IBX centers 2,154 358 3,320 4,851 4,744
--------- --------- --------- ---------- ----------
Revenues $ 73,726 $ 68,548 $ 58,096 $ 207,143 $ 159,259
========= ========= ========= ========== ==========
(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 $ 49,137 $ 45,563 $ 40,955 $ 138,045 $ 116,639
Depreciation,
amortization
and accretion
expense (18,735) (17,755) (15,836) (53,805) (46,274)
Stock-based
compensation
expense (664) (963) - (2,385) -
--------- --------- --------- ---------- ----------
Cash cost of
revenues $ 29,738 $ 26,845 $ 25,119 $ 81,855 $ 70,365
========= ========= ========= ========== ==========
The geographic split of our cash cost of revenues is presented
below:
U.S. cash cost
of revenues $ 25,154 $ 22,312 $ 20,933 $ 68,417 $ 58,333
Asia-Pacific
cash cost of
revenues 4,584 4,533 4,186 13,438 12,032
--------- --------- --------- ---------- ----------
Cash cost of
revenues $ 29,738 $ 26,845 $ 25,119 $ 81,855 $ 70,365
========= ========= ========= ========== ==========
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 $ 26,422 $ 24,849 $ 23,292 $ 73,747 $ 65,773
Same IBX
centers-
depreciation,
amortization
and accretion
expense 16,445 16,433 14,031 48,410 42,410
Same IBX
centers-stock-
based
compensation
expense 632 963 - 2,353 -
--------- --------- --------- ---------- ----------
Same IBX
centers cost
of revenues 43,499 42,245 37,323 124,510 108,183
--------- --------- --------- ---------- ----------
New IBX
centers-cash
cost of
revenues 3,316 1,996 1,827 8,108 4,592
New IBX
centers-
depreciation,
amortization
and accretion
expense 2,290 1,322 1,805 5,395 3,864
New IBX
centers-stock-
based
compensation
expense 32 - - 32 -
--------- --------- --------- ---------- ----------
New IBX
centers cost
of revenues 5,638 3,318 3,632 13,535 8,456
--------- --------- --------- ---------- ----------
Cost of
revenues $ 49,137 $ 45,563 $ 40,955 $ 138,045 $ 116,639
========= ========= ========= ========== ==========
(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 $ 7,502 $ 8,480 $ 4,829 $ 23,180 $ 14,793
Depreciation
and
amortization
expense (15) (15) (15) (45) (45)
Stock-based
compensation
expense (1,623) (2,132) (248) (5,647) (1,149)
--------- --------- --------- ---------- ----------
Cash sales
and
marketing
expenses $ 5,864 $ 6,333 $ 4,566 $ 17,488 $ 13,599
========= ========= ========= ========== ==========
(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 $ 18,631 $ 17,725 $ 12,078 $ 53,486 $ 33,594
Depreciation
and
amortization
expense (836) (591) (476) (1,978) (1,468)
Stock-based
compensation
expense (4,598) (5,802) (1,110) (15,508) (5,142)
--------- --------- --------- ---------- ----------
Cash general
and adminis-
trative
expenses $ 13,197 $ 11,332 $ 10,492 $ 36,000 $ 26,984
========= ========= ========= ========== ==========
(7)Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and
marketing
expenses $ 5,864 $ 6,333 $ 4,566 $ 17,488 $ 13,599
Cash general
and
administrative
expenses 13,197 11,332 10,492 36,000 26,984
--------- --------- --------- ---------- ----------
Cash SG&A $ 19,061 $ 17,665 $ 15,058 $ 53,488 $ 40,583
========= ========= ========= ========== ==========
The geographic split of our cash operating expenses, or cash SG&A,
is presented below:
U.S. cash SG&A $ 16,261 $ 14,599 $ 12,338 $ 44,187 $ 32,732
Asia-Pacific
cash SG&A 2,800 3,066 2,720 9,301 7,851
--------- --------- --------- ---------- ----------
Cash SG&A $ 19,061 $ 17,665 $ 15,058 $ 53,488 $ 40,583
========= ========= ========= ========== ==========
(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 $ (3,071) $ (3,220) $ 234 $ (9,095) $ (5,767)
Depreciation,
amortization
and accretion
expense 19,586 18,361 16,327 55,828 47,787
Stock-based
compensation
expense 6,885 8,897 1,358 23,540 6,291
Restructuring
charges 1,527 - - 1,527 -
--------- --------- --------- ---------- ----------
EBITDA $ 24,927 $ 24,038 $ 17,919 $ 71,800 $ 48,311
========= ========= ========= ========== ==========
The geographic split of our EBITDA is presented below:
U.S. income
(loss) from
operations $ (3,967) $ (3,405) $ 541 $ (9,619) $ (3,944)
U.S.
depreciation,
amortization
and accretion
expense 18,607 17,419 15,357 52,892 44,515
U.S. stock-
based
compensation
expense 6,072 7,975 1,358 20,990 6,291
U.S.
restructuring
charges 1,527 - - 1,527 -
--------- --------- --------- ---------- ----------
U.S. EBITDA 22,239 21,989 17,256 65,790 46,862
--------- --------- --------- ---------- ----------
Asia-Pacific
income (loss)
from
operations 896 185 (307) 524 (1,823)
Asia-Pacific
depreciation,
amortization
and accretion
expense 979 942 970 2,936 3,272
Asia-Pacific
stock-based
compensation
expense 813 922 - 2,550 -
Asia-Pacific
restructuring
charges - - - - -
--------- --------- --------- ---------- ----------
Asia-Pacific
EBITDA 2,688 2,049 663 6,010 1,449
--------- --------- --------- ---------- ----------
EBITDA $ 24,927 $ 24,038 $ 17,919 $ 71,800 $ 48,311
========= ========= ========= ========== ==========
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 $ 944 $ 76 $ 1,008 $ 652 $ (1,179)
Same IBX
centers-
depreciation,
amortization
and accretion
expense 17,296 17,039 14,522 50,433 43,923
Same IBX
centers-stock-
based
compensation
expense 6,853 8,897 1,358 23,508 6,291
Same IBX
centers-
restructuring
charges 1,527 - - 1,527 -
--------- --------- --------- ---------- ----------
Same IBX
center
EBITDA 26,620 26,012 16,888 76,120 49,035
--------- --------- --------- ---------- ----------
New IBX
centers-income
(loss) from
operations (4,015) (3,296) (774) (9,747) (4,588)
New IBX
centers-
depreciation,
amortization
and accretion
expense 2,290 1,322 1,805 5,395 3,864
New IBX
centers-stock-
based
compensation
expense 32 - - 32 -
New IBX
centers-
restructuring
charges - - - - -
--------- --------- --------- ---------- ----------
New IBX
center
EBITDA (1,693) (1,974) 1,031 (4,320) (724)
--------- --------- --------- ---------- ----------
EBITDA $ 24,927 $ 24,038 $ 17,919 $ 71,800 $ 48,311
========= ========= ========= ========== ==========
(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 60% 62% 59% 62% 58%
========= ========= ========= ========== ==========
Asia-Pacific
cash gross
margins 54% 53% 45% 53% 44%
========= ========= ========= ========== ==========
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 63% 64% 57% 64% 57%
========= ========= ========= ========== ==========
(10)We define EBITDA flow-through rate as incremental EBITDA growth
divided by incremental revenue growth as follows:
EBITDA -
current period$ 24,927 $ 24,038 $ 17,919 $ 71,800 $ 48,311
Less EBITDA -
prior period (24,038) (22,835) (16,055) (55,802) (29,957)
--------- --------- --------- ---------- ----------
EBITDA growth$ 889 $ 1,203 $ 1,864 $ 15,998 $ 18,354
========= ========= ========= ========== ==========
Revenues -
current period$ 73,726 $ 68,548 $ 58,096 $ 207,143 $ 159,259
Less revenues -
prior period (68,548) (64,869) (52,479) (172,373) (126,851)
--------- --------- --------- ---------- ----------
Revenue
growth $ 5,178 $ 3,679 $ 5,617 $ 34,770 $ 32,408
========= ========= ========= ========== ==========
EBITDA flow-
through rate 17% 33% 33% 46% 57%
========= ========= ========= ========== ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets September 30, December 31,
2006 2005
------------- ------------
Cash, cash equivalents and investments $ 166,346 $ 188,855
Accounts receivable, net 24,129 17,237
Property and equipment, net 499,917 438,790
Goodwill and other intangible assets, net 23,375 21,829
Debt issuance costs, net 2,685 3,075
Prepaid expenses 7,378 5,098
Deposits 3,727 3,548
Other assets 3,063 2,565
------------- ------------
Total assets $ 730,620 $ 680,997
============= ============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 23,007 $ 22,557
Accrued property and equipment 18,597 15,783
Accrued restructuring charges 44,546 49,831
Borrowings under credit line 40,000 30,000
Capital lease obligations 33,925 34,530
Other financing obligations 61,150 61,675
Mortgage payable 59,165 60,000
Convertible subordinated debentures 86,250 86,250
Deferred installation revenue 9,678 7,658
Customer deposits 1,008 1,188
Deferred rent 21,118 18,792
Asset retirement obligations 4,043 3,649
Other liabilities 549 411
------------- ------------
Total liabilities 403,036 392,324
------------- ------------
Common stock 29 27
Additional paid-in capital 887,319 839,497
Deferred stock-based compensation - (4,930)
Accumulated other comprehensive income 2,791 1,126
Accumulated deficit (562,555) (547,047)
------------- ------------
Total stockholders' equity 327,584 288,673
------------- ------------
Total liabilities and
stockholders' equity $ 730,620 $ 680,997
============= ============
- --------------------------------------------------------- ------------
Ending headcount by geographic region is as
follows:
U.S. headcount 422 372
Asia-pacific headcount 171 165
------------- ------------
Total headcount 593 537
============= ============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------- --------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
--------- --------- --------- ---------- ---------
Cash flows from
operating
activities:
Net loss $ (5,168) $ (5,270) $ (783) $ (15,508) $(10,008)
Adjustments to
reconcile net
loss to net
cash provided
by operating
activities:
Depreciation,
amortization
and accretion 19,586 18,361 16,327 55,828 47,787
Stock-based
compensation 6,885 8,897 1,358 23,540 6,291
Non-cash
interest
expense 227 208 278 643 1,451
Restructuring
charges 1,527 - - 1,527 -
Other
reconciling
items 437 (64) (404) (354) (453)
Changes in
operating
assets and
liabilities:
Accounts
receivable (646) (5,011) (75) (6,908) (3,823)
Accounts
payable and
accrued
expenses (1,134) 2,597 650 470 3,602
Accrued
restructuring
charges (3,088) (3,168) (480) (9,213) (1,448)
Other assets
and
liabilities 2,029 (443) (1,377) (472) 5,637
--------- --------- --------- ---------- ---------
Net cash
provided
by
operating
activities 20,655 16,107 15,494 49,553 49,036
--------- --------- --------- ---------- ---------
Cash flows from
investing
activities:
Purchase of Los
Angeles IBX
property - - (34,727) - (34,727)
Purchase of
Chicago IBX
property - (9,766) - (9,766) -
Purchases of
other property
and equipment (46,620) (29,671) (7,079) (102,904) (22,492)
Accrued property
and equipment (3,341) 3,643 (267) 2,814 2,245
Other investing
activities 2 - - 8 -
--------- --------- --------- ---------- ---------
Net cash
used in
investing
activities (49,959) (35,794) (42,073) (109,848) (54,974)
--------- --------- --------- ---------- ---------
Cash flows from
financing
activities:
Proceeds from
warrants, stock
options and
employee stock
purchase plans 8,180 5,862 3,585 28,756 11,217
Proceeds from
borrowings
under credit
line 40,000 - - 40,000 -
Repayment of
borrowings
under credit
line - - - (30,000) -
Repayment of
capital lease
obligations (207) (201) (167) (605) (489)
Repayment of
other financing
obligations (184) (174) (34) (525) (3,724)
Repayment of
mortgage
payable (319) (311) - (835) -
Other financing
activities (9) 200 (342) 561 (342)
--------- --------- --------- ---------- ---------
Net cash
provided
by
financing
activities 47,461 5,376 3,042 37,352 6,662
--------- --------- --------- ---------- ---------
Effect of foreign
currency exchange
rates on cash and
cash equivalents 250 27 (202) 434 (526)
--------- --------- --------- ---------- ---------
Net increase
(decrease) in
cash, cash
equivalents and
investments 18,407 (14,284) (23,739) (22,509) 198
Cash, cash
equivalents and
investments at
beginning of
period 147,939 162,223 132,029 188,855 108,092
--------- --------- --------- ---------- ---------
Cash, cash
equivalents and
investments at end
of period $166,346 $147,939 $108,290 $ 166,346 $108,290
========= ========= ========= ========== =========
Free cash flow (2) $(29,304) $(19,687) $(26,579) $ (60,295) $ (5,938)
========= ========= ========= ========== =========
Adjusted free cash
flow (3) $(29,304) $ (9,921) $ 8,148 $ (50,529) $ 28,789
========= ========= ========= ========== =========
- -------------------
(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 $ 20,655 $ 16,107 $ 15,494 $ 49,553 $ 49,036
Net cash used in
investing
activities as
presented above (49,959) (35,794) (42,073) (109,848) (54,974)
--------- --------- --------- ---------- ---------
Free cash flow $(29,304) $(19,687) $(26,579) $ (60,295) $ (5,938)
========= ========= ========= ========== =========
(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) $(29,304) $(19,687) $(26,579) $ (60,295) $ (5,938)
Less purchase of
Los Angeles IBX
property - - 34,727 - 34,727
Less purchase of
Chicago IBX
property - 9,766 - 9,766 -
--------- --------- --------- ---------- ---------
Adjusted free
cash flow $(29,304) $ (9,921) $ 8,148 $ (50,529) $ 28,789
========= ========= ========= ========== =========
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