Exhibit 99.1
Equinix Reports Second Quarter 2007 Results
-- Increased revenues to $91.8 million, an 8% increase over the
previous quarter and a 34% increase over the same quarter last
year
-- Increased quarterly EBITDA, a non-GAAP financial measure, to
$35.3 million, a 9% increase over the previous quarter
-- Raises 2007 annual revenue guidance to $373.0 to $377.0
million and EBITDA guidance to $141.0 to $143.0 million
-- Announced its intention to acquire IXEurope for approximately
GBP 270.1 million
FOSTER CITY, Calif.--(BUSINESS WIRE)--July 25, 2007--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, 2007.
Revenues were $91.8 million for the second quarter, a 34% 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 $87.9 million, a 35%
increase over the same quarter last year and a 9% increase over the
previous quarter. Non-recurring revenues were $3.9 million in the
quarter, consisting primarily of professional services and
installation fees.
Cost of revenues were $55.6 million for the second quarter,
including $1.0 million of stock-based compensation, a 5% increase over
the previous quarter and a 22% increase over the same quarter last
year. Cost of revenues, excluding depreciation, amortization,
accretion and stock-based compensation of $21.9 million, were $33.7
million for the second quarter, a 6% increase over the previous
quarter and a 26% 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 63%, up from 62% the previous quarter and up from 61% 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 68%.
Selling, general and administrative expenses were $33.4 million
for the second quarter, including $9.0 million of stock-based
compensation, a 6% increase from the previous quarter and a 27%
increase over the same quarter last year. Selling, general and
administrative expenses, excluding depreciation, amortization and
stock-based compensation of $10.6 million, were $22.8 million for the
second quarter, a 10% increase over the previous quarter and a 29%
increase over same quarter last year.
Net income for the second quarter was $1.2 million, including
stock-based compensation expense of $10.0 million. This represents
basic and diluted net income per share of $0.04 based on a weighted
average share count of 31.1 million and 32.7 million, respectively.
Excluding stock-based compensation and the restructuring charge, the
Company had non-GAAP net income of $11.7 million for the second
quarter. This was a $2.3 million increase over the prior quarter and
an $8.1 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 $35.3
million, up from $32.4 million the previous quarter and up from $24.0
million the same quarter last year.
"Equinix delivered an exceptional second quarter and, as
demonstrated by our increased guidance, is positioned for a very
strong second half," said Steve Smith, CEO of Equinix. "Our continued
execution on our expansion plan and our strategic move into Europe
with the announced acquisition of IXEurope demonstrate our ability to
fully capitalize on our market leadership position."
Capital expenditures in the second quarter were $139.8 million, of
which $10.2 million was attributed to ongoing capital expenditures and
$129.6 million was attributed to expansion capital expenditures. In
addition, the Company purchased a new property in the Los Angeles
metro area for $49.0 million with cash in June 2007.
The Company generated cash from operating activities of $38.1
million as compared to $20.1 million in the previous quarter. Cash
used in investing activities was $157.4 million as compared to $57.6
million in the previous quarter. Adjusted free cash flow was a
negative $70.3 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, 2007, the Company's cash, cash equivalents and
investments were $324.0 million, as compared to $392.4 million in the
previous quarter.
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 $80.5 million; cost of revenues were
$42.7 million; cost of revenues, excluding depreciation,
amortization, accretion and stock-based compensation, were
$25.9 million and cash gross margins for the quarter were 68%.
EBITDA on a same IBX basis was $32.5 million
-- Equinix added 96 new customers in the quarter
-- On a weighted average basis, the number of cabinets billing at
the end of the quarter was approximately 19,200 representing
an approximate utilization rate of 77%
-- 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
-- The company announced the acquisition of a site for a new IBX
in the Los Angeles market for $49.0 million, which closed in
June 2007, as well as its intention to expand its existing IBX
center in Santa Clara by approximately 1,100 cabinets
-- The company completed its purchase of its flagship Silicon
Valley IBX for $65.0 million in early July 2007
Business Outlook
For the third quarter 2007, revenues are expected to be in the
range of $96.5 to $97.5 million. Cash gross margins are expected to be
approximately 61%. Cash selling, general and administrative expenses
are expected to be $22.0 to $23.0 million. EBITDA for the third
quarter is expected to be $36.0 to $37.0 million. Net loss is expected
to be approximately $2.0 million, including the impact of
approximately $10.0 million of stock-based compensation expense. Net
interest expense is expected to be approximately $6.0 million. The
weighted average shares outstanding are expected to be approximately
31.4 million. Capital expenditures are expected to be approximately
$100.0 to $105.0 million, including approximately $90.0 million of
expansion capital expenditures.
For the full year of 2007, total revenues are expected to be in
the range of $373.0 to $377.0 million. Total year cash gross margins
are expected to be in the range of 61% to 62% including approximately
$6.9 million of net cash costs attributed to our expansion IBXs. Cash
selling, general and administrative expenses are expected to be
approximately $88.0 million. EBITDA for the year is expected to be
$141.0 to $143.0 million. Net loss is expected to be in a range of
$10.0 to $12.0 million, including the impact of approximately $41.0
million of stock-based compensation expense. Net interest expense and
loss on conversion and extinguishment of debt is expected to be
approximately $16.0 million. The weighted average shares outstanding
are expected to be approximately 30.7 million. Capital expenditures
for 2007 are expected to be in a range of $380.0 to $390.0 million,
comprised of approximately $40.0 million of ongoing capital
expenditures and $340.0 to $350.0 million of expansion capital
expenditures for the build out of the Washington, D.C., Tokyo and
Singapore expansions opened this year, as well as the announced
expansions in the Washington, D.C., Chicago, New York, Silicon Valley
and Los Angeles metro areas. This range reflects $10.0 million of
expansion capital shifted from 2007 into 2008 for the second phase of
the Tokyo build.
The Company will discuss its results and guidance on its quarterly
conference call on Wednesday, July 25, 2007, at 5:30 p.m. EDT (2:30
p.m. PDT). To hear the conference call live, please dial
1-773-799-3263 (domestic and international) and reference the pass
code (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, July 25, 2007 at 7:30 p.m. EDT (4:30 p.m. PDT) by dialing
1-203-369-3899. 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 10
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;
unanticipated costs or difficulties relating to the integration of
IXEurope into Equinix; a failure to receive significant revenue from
customers in recently built out 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 litigation relating to past stock option 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 pro
forma revenues, 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 a non-recurring revenue
adjustment with respect to 2006 results, depreciation, amortization,
accretion, stock-based compensation, restructuring charges and, with
respect to 2006 results, the gain on Honolulu IBX sale, and with
respect to 2007 results, the loss from conversion of debt. 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 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. Equinix excludes
restructuring charges from its non-GAAP financial measures. 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. With respect to its 2006
results, Equinix reports pro forma revenues and excludes the gain on
Honolulu IBX sale. Pro forma revenues exclude a revenue adjustment
recorded in the fourth quarter of 2006 in connection with our adoption
of Staff Accounting Bulletin No. 108, which is a one-time adjustment
and will not recur. The gain on Honolulu IBX sale represents a unique
transaction for the Company and future sales of IBX centers are not
expected. The Honolulu market was not considered a core, strategic
market for the Company. With respect to its 2007 results, Equinix
excludes the loss from conversion of debt as this activity is not
typical for the company. Management believes such items as
restructuring charges, the gain on the sale of an IBX center and the
loss from conversion of debt are unique transactions that are not
expected to recur, and consequently, does not consider these items as
a normal component of expenses or income 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
core, 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, 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, 2007
and 2006, 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,
2007 2007 2006 2007 2006
-------- --------- -------- --------- ---------
Recurring revenues $87,904 $80,886 $65,089 $168,790 $126,841
Non-recurring revenues 3,933 4,223 3,459 8,156 6,576
-------- --------- -------- --------- ---------
Revenues 91,837 85,109 68,548 176,946 133,417
Cost of revenues 55,609 52,765 45,563 108,374 88,908
-------- --------- -------- --------- ---------
Gross profit 36,228 32,344 22,985 68,572 44,509
-------- --------- -------- --------- ---------
Operating expenses:
Sales and
marketing 8,520 8,677 8,480 17,197 15,678
General and
administrative 24,854 22,861 17,725 47,715 34,855
Restructuring
charges 407 - - 407 -
-------- --------- -------- --------- ---------
Total
operating
expenses 33,781 31,538 26,205 65,319 50,533
-------- --------- -------- --------- ---------
Income (loss) from
operations 2,447 806 (3,220) 3,253 (6,024)
-------- --------- -------- --------- ---------
Interest and other
income (expense):
Interest income 5,082 1,949 1,730 7,031 3,341
Interest expense
and other (6,115) (3,462) (3,565) (9,577) (7,433)
Loss on conversion
of debt - (3,395) - (3,395) -
-------- --------- -------- --------- ---------
Total
interest and
other, net (1,033) (4,908) (1,835) (5,941) (4,092)
-------- --------- -------- --------- ---------
Net income (loss)
before income taxes
and cumulative effect
of a change in
accounting principle 1,414 (4,102) (5,055) (2,688) (10,116)
Income taxes (197) (354) (215) (551) (600)
Net income (loss)
before cumulative
effect of a change in
accounting principle 1,217 (4,456) (5,270) (3,239) (10,716)
-------- --------- -------- --------- ---------
Cumulative effect
of a change in
accounting
principle - - - - 376
-------- --------- -------- --------- ---------
Net income (loss) $ 1,217 $(4,456) $(5,270) $ (3,239) $(10,340)
======== ========= ======== ========= =========
Net income (loss) per
share:
Basic net income
(loss) per share $ 0.04 $ (0.15) $ (0.19) $ (0.11) $ (0.37)
======== ========= ======== ========= =========
Diluted net income
(loss) per share $ 0.04 $ (0.15) $ (0.19) $ (0.11) $ (0.37)
======== ========= ======== ========= =========
Shares used in
computing basic
net income (loss)
per share 31,126 29,702 28,468 30,424 28,160
======== ========= ======== ========= =========
Shares used in
computing diluted
net income (loss)
per share 32,671 29,702 28,468 30,424 28,160
======== ========= ======== ========= =========
- ----------------------------------------------------------------------
Non-GAAP net income
(loss) (1) $11,669 $ 9,437 $ 3,627 $ 21,106 $ 6,315
======== ========= ======== ========= =========
(1)Non-GAAP net income (loss) excludes stock-based compensation,
restructuring charges and the loss on debt conversion as follows:
Net income (loss) $ 1,217 $(4,456) $(5,270) $ (3,239) $(10,340)
Stock-based
compensation 10,045 10,498 8,897 20,543 16,655
Restructuring
charges 407 - - 407 -
Loss on conversion
of debt - 3,395 - 3,395 -
-------- --------- -------- --------- ---------
Non-GAAP net
income
(loss) $11,669 $ 9,437 $ 3,627 $ 21,106 $ 6,315
======== ========= ======== ========= =========
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,
2007 2007 2006 2007 2006
--------- --------- --------- ---------- ----------
Recurring revenues $ 87,904 $ 80,886 $ 65,089 $ 168,790 $ 126,841
Non-recurring
revenues 3,933 4,223 3,459 8,156 6,576
--------- --------- --------- ---------- ----------
Revenues (1) 91,837 85,109 68,548 176,946 133,417
Cash cost of
revenues (2) 33,739 31,931 26,845 65,670 52,117
--------- --------- --------- ---------- ----------
Cash gross
profit (3) 58,098 53,178 41,703 111,276 81,300
--------- --------- --------- ---------- ----------
Cash operating
expenses (4):
Cash sales and
marketing
expenses(5) 6,862 6,178 6,333 13,040 11,624
Cash general
and admin-
istrative
expenses (6) 15,925 14,622 11,332 30,547 22,803
--------- --------- --------- ---------- ----------
Total cash
operating
expenses (7) 22,787 20,800 17,665 43,587 34,427
--------- --------- --------- ---------- ----------
EBITDA (8) $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873
========= ========= ========= ========== ==========
Cash gross margins
(9) 63% 62% 61% 63% 61%
========= ========= ========= ========== ==========
EBITDA flow-through
rate (10) 44% 51% 33% 56% 53%
========= ========= ========= ========== ==========
- -------------------
(1)The geographic split of our revenues is presented below:
U.S. revenues $ 78,250 $ 72,526 $ 58,900 $ 150,776 $ 114,741
Asia-Pacific
revenues 13,587 12,583 9,648 26,170 18,676
--------- --------- --------- ---------- ----------
Revenues $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417
========= ========= ========= ========== ==========
Revenues on a services basis is presented below:
Colocation $ 65,641 $ 59,759 $ 47,988 $ 125,400 $ 93,557
Interconnection 17,653 16,720 12,644 34,373 24,448
Managed
infrastructure 4,285 4,099 4,046 8,384 7,979
Rental 325 308 411 633 857
--------- --------- --------- ---------- ----------
Recurring
revenues 87,904 80,886 65,089 168,790 126,841
Non-recurring
revenues 3,933 4,223 3,459 8,156 6,576
--------- --------- --------- ---------- ----------
Revenues $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417
========= ========= ========= ========== ==========
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 $ 80,470 $ 77,477 $ 68,190 $ 157,947 $ 130,720
New IBX centers 11,367 7,632 358 18,999 2,697
--------- --------- --------- ---------- ----------
Revenues $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417
========= ========= ========= ========== ==========
(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 $ 55,609 $ 52,765 $ 45,563 $ 108,374 $ 88,908
Depreciation,
amortization
and accretion
expense (20,866) (19,697) (17,755) (40,563) (35,070)
Stock-based
compensation
expense (1,004) (1,137) (963) (2,141) (1,721)
--------- --------- --------- ---------- ----------
Cash cost of
revenues $ 33,739 $ 31,931 $ 26,845 $ 65,670 $ 52,117
========= ========= ========= ========== ==========
The geographic split of our cash cost of revenues is presented
below:
U.S. cash cost
of revenues $ 27,899 $ 26,498 $ 22,312 $ 54,397 $ 43,263
Asia-Pacific
cash cost of
revenues 5,840 5,433 4,533 11,273 8,854
--------- --------- --------- ---------- ----------
Cash cost of
revenues $ 33,739 $ 31,931 $ 26,845 $ 65,670 $ 52,117
========= ========= ========= ========== ==========
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 $ 25,884 $ 25,846 $ 24,849 $ 51,730 $ 47,325
Same IBX
centers-
depreciation,
amortization
and accretion
expense 15,948 15,885 16,433 31,833 31,965
Same IBX
centers-stock-
based
compensation
expense 880 1,006 963 1,886 1,721
--------- --------- --------- ---------- ----------
Same IBX
centers cost
of revenues 42,712 42,737 42,245 85,449 81,011
--------- --------- --------- ---------- ----------
New IBX
centers-cash
cost of
revenues 7,855 6,085 1,996 13,940 4,792
New IBX
centers-
depreciation,
amortization
and accretion
expense 4,918 3,812 1,322 8,730 3,105
New IBX
centers-stock-
based
compensation
expense 124 131 - 255 -
--------- --------- --------- ---------- ----------
New IBX
centers cost
of revenues 12,897 10,028 3,318 22,925 7,897
--------- --------- --------- ---------- ----------
Cost of
revenues $ 55,609 $ 52,765 $ 45,563 $ 108,374 $ 88,908
========= ========= ========= ========== ==========
(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 $ 8,520 $ 8,677 $ 8,480 $ 17,197 $ 15,678
Depreciation
and
amortization
expense (15) (15) (15) (30) (30)
Stock-based
compensation
expense (1,643) (2,484) (2,132) (4,127) (4,024)
--------- --------- --------- ---------- ----------
Cash sales and
marketing
expenses $ 6,862 $ 6,178 $ 6,333 $ 13,040 $ 11,624
========= ========= ========= ========== ==========
(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 $ 24,854 $ 22,861 $ 17,725 $ 47,715 $ 34,855
Depreciation
and
amortization
expense (1,531) (1,362) (591) (2,893) (1,142)
Stock-based
compensation
expense (7,398) (6,877) (5,802) (14,275) (10,910)
--------- --------- --------- ---------- ----------
Cash general
and admin-
istrative
expenses $ 15,925 $ 14,622 $ 11,332 $ 30,547 $ 22,803
========= ========= ========= ========== ==========
(7)Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and
marketing
expenses $ 6,862 $ 6,178 $ 6,333 $ 13,040 $ 11,624
Cash general
and
administrative
expenses 15,925 14,622 11,332 30,547 22,803
--------- --------- --------- ---------- ----------
Cash SG&A $ 22,787 $ 20,800 $ 17,665 $ 43,587 $ 34,427
========= ========= ========= ========== ==========
The geographic split of our cash operating expenses, or cash SG&A,
is presented below:
U.S. cash SG&A $ 19,328 $ 17,071 $ 14,599 $ 36,399 $ 27,926
Asia-Pacific
cash SG&A 3,459 3,729 3,066 7,188 6,501
--------- --------- --------- ---------- ----------
Cash SG&A $ 22,787 $ 20,800 $ 17,665 $ 43,587 $ 34,427
========= ========= ========= ========== ==========
(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 $ 2,447 $ 806 $ (3,220) $ 3,253 $ (6,024)
Depreciation,
amortization
and accretion
expense 22,412 21,074 18,361 43,486 36,242
Stock-based
compensation
expense 10,045 10,498 8,897 20,543 16,655
Restructuring
charges 407 - - 407 -
--------- --------- --------- ---------- ----------
EBITDA $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873
========= ========= ========= ========== ==========
The geographic split of our EBITDA is presented below:
U.S. income
(loss) from
operations $ 1,246 $ 368 $ (3,405) $ 1,614 $ (5,651)
U.S.
depreciation,
amortization
and accretion
expense 20,626 19,439 17,419 40,065 34,285
U.S. stock-
based
compensation
expense 8,744 9,150 7,975 17,894 14,918
U.S.
restructuring
charges 407 - - 407 -
--------- --------- --------- ---------- ----------
U.S. EBITDA 31,023 28,957 21,989 59,980 43,552
--------- --------- --------- ---------- ----------
Asia-Pacific
income (loss)
from
operations 1,201 438 185 1,639 (373)
Asia-Pacific
depreciation,
amortization
and accretion
expense 1,786 1,635 942 3,421 1,957
Asia-Pacific
stock-based
compensation
expense 1,301 1,348 922 2,649 1,737
Asia-Pacific
restructuring
charges - - - - -
--------- --------- --------- ---------- ----------
Asia-Pacific
EBITDA 4,288 3,421 2,049 7,709 3,321
--------- --------- --------- ---------- ----------
EBITDA $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873
========= ========= ========= ========== ==========
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 $ 4,689 $ 3,925 $ 76 $ 8,614 $ (292)
Same IBX
centers-
depreciation,
amortization
and accretion
expense 17,494 17,262 17,039 34,756 33,137
Same IBX
centers-stock-
based
compensation
expense 9,921 10,367 8,897 20,288 16,655
Same IBX
centers-
restructuring
charges 407 - - 407 -
--------- --------- --------- ---------- ----------
Same IBX
center EBITDA 32,511 31,554 26,012 64,065 49,500
--------- --------- --------- ---------- ----------
New IBX
centers-income
(loss) from
operations (2,242) (3,119) (3,296) (5,361) (5,732)
New IBX
centers-
depreciation,
amortization
and accretion
expense 4,918 3,812 1,322 8,730 3,105
New IBX
centers-stock-
based
compensation
expense 124 131 - 255 -
New IBX
centers-
restructuring
charges - - - - -
--------- --------- --------- ---------- ----------
New IBX center
EBITDA 2,800 824 (1,974) 3,624 (2,627)
--------- --------- --------- ---------- ----------
EBITDA $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873
========= ========= ========= ========== ==========
(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 64% 63% 62% 64% 62%
========= ========= ========= ========== ==========
Asia-Pacific
cash gross
margins 57% 57% 53% 57% 53%
========= ========= ========= ========== ==========
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 68% 67% 64% 67% 64%
========= ========= ========= ========== ==========
(10)We define EBITDA flow-through rate as incremental EBITDA growth
divided by incremental revenue growth as follows:
EBITDA -
current
period $ 35,311 $ 32,378 $ 24,038 $ 67,689 $ 46,873
Less EBITDA -
prior period (32,378) (30,272) (22,835) (55,199) (39,747)
--------- --------- --------- ---------- ----------
EBITDA growth $ 2,933 $ 2,106 $ 1,203 $ 12,490 $ 7,126
========= ========= ========= ========== ==========
Revenues -
current
period $ 91,837 $ 85,109 $ 68,548 $ 176,946 $ 133,417
Less pro forma
revenues -
prior period (85,109) (80,951) (64,869) (154,677) (119,894)
--------- --------- --------- ---------- ----------
Pro forma
revenue
growth $ 6,728 $ 4,158 $ 3,679 $ 22,269 $ 13,523
========= ========= ========= ========== ==========
EBITDA flow-
through rate 44% 51% 33% 56% 53%
========= ========= ========= ========== ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets June 30, December 31,
2007 2006
----------- ------------
Cash, cash equivalents and investments $ 323,966 $ 156,481
Accounts receivable, net 28,140 26,864
Property and equipment, net 760,175 546,395
Goodwill and other intangible assets, net 17,299 17,441
Debt issuance costs, net 14,603 3,006
Deposits 10,470 3,932
Prepaid expenses 7,845 7,160
Deferred tax assets 6,612 6,910
Other assets 6,341 3,643
----------- ------------
Total assets $1,175,451 $ 771,832
=========== ============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 35,425 $ 27,269
Accrued property and equipment 71,216 23,337
Accrued restructuring charges 36,416 41,572
Capital lease and other financing obligations 93,754 94,699
Mortgage and loan payable 167,129 98,896
Convertible debt 282,250 86,250
Deferred rent 20,907 20,924
Deferred installation revenue 13,764 11,694
Deferred recurring revenue 6,171 6,732
Asset retirement obligations 4,273 3,985
Other liabilities 1,472 1,446
----------- ------------
Total liabilities 732,777 416,804
----------- ------------
Common stock 32 29
Additional paid-in capital 995,555 904,573
Accumulated other comprehensive income 3,770 3,870
Accumulated deficit (556,683) (553,444)
----------- ------------
Total stockholders' equity 442,674 355,028
----------- ------------
Total liabilities and stockholders'
equity $1,175,451 $ 771,832
=========== ============
- --------------------------------------------------------- ------------
Ending headcount by geographic region is as follows:
U.S. headcount 476 442
Asia-pacific headcount 183 174
----------- ------------
Total headcount 659 616
=========== ============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - GAAP PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
------------------------------ --------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
---------- --------- --------- ---------- ---------
Net cash provided
by operating
activities $ 37,862 $ 19,850 $ 16,107 $ 57,712 $ 28,898
Net cash used in
investing
activities (181,892) (48,057) (25,348) (229,949) (60,921)
Net cash provided
by (used in)
financing
activities 50,519 273,253 5,376 323,772 (10,109)
Effect of foreign
currency exchange
rates on cash and
cash equivalents 449 51 40 500 165
---------- --------- --------- ---------- ---------
Net increase
(decrease) in
cash and cash
equivalents (93,062) 245,097 (3,825) 152,035 (41,967)
Cash and cash
equivalents at
beginning of
period 327,660 82,563 81,125 82,563 119,267
---------- --------- --------- ---------- ---------
Cash and cash
equivalents at
end of period $ 234,598 $327,660 $ 77,300 $ 234,598 $ 77,300
========== ========= ========= ========== =========
In addition to the above condensed consolidated statements of cash
flows presented on a GAAP basis, the Company presents non-GAAP
condensed consolidated statements of cash flows which combine the
Company's short-term and long-term investments with our cash and cash
equivalents in an effort to present our total unrestricted cash and
equivalent balances as presented herein in our condensed consolidated
balance sheets.
Following is a reconciliation of our cash and cash equivalents to our
cash, cash equivalents and investments, which is the basis of how our
non-GAAP condensed consolidated statements of cash flows are
presented on the following page:
Cash and cash
equivalents $ 234,598 $327,660 $ 77,300 $ 234,598 $ 77,300
Short-term
investments 67,728 53,758 53,524 67,728 53,524
Long-term
investments 21,640 10,981 17,115 21,640 17,115
---------- --------- --------- ---------- ---------
Cash, cash
equivalents and
investments as
presented on
condensed balance
sheet presented
herein $ 323,966 $392,399 $147,939 $ 323,966 $147,939
========== ========= ========= ========== =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NON-GAAP
PRESENTATION (1)
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
------------------------------ --------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
---------- --------- --------- ---------- ---------
Cash flows from
operating
activities:
Net income
(loss) $ 1,217 $ (4,456) $ (5,270) $ (3,239) $(10,340)
Adjustments to
reconcile net
income (loss)
to net cash
provided by
operating
activities:
Depreciation,
amortization
and accretion 22,412 21,074 18,361 43,486 36,242
Stock-based
compensation 10,045 10,498 8,897 20,543 16,655
Debt issuance
costs 784 389 208 1,173 416
Restructuring
charges 407 - - 407 -
Other
reconciling
items 138 7 (64) 145 (791)
Changes in
operating
assets and
liabilities:
Accounts
receivable (494) (916) (5,011) (1,410) (6,262)
Accounts
payable and
accrued
expenses 7,950 (2,657) 2,597 5,293 1,604
Accrued
restructuring
charges (3,354) (3,543) (3,168) (6,897) (6,125)
Other assets
and
liabilities (965) (302) (443) (1,267) (2,501)
---------- --------- --------- ---------- ---------
Net cash
provided by
operating
activities 38,140 20,094 16,107 58,234 28,898
---------- --------- --------- ---------- ---------
Cash flows from
investing
activities:
Purchase of Los
Angeles IBX
property (49,040) - - (49,040) -
Purchase of San
Jose IBX
property - (6,500) - (6,500) -
Purchase of
Chicago IBX
property - - (9,766) - (9,766)
Purchases of
other property
and equipment (139,832) (67,056) (29,671) (206,888) (56,284)
Accrued property
and equipment 31,425 16,454 3,643 47,879 6,155
Other investing
activities - (470) - (470) 6
---------- --------- --------- ---------- ---------
Net cash used
in investing
activities (157,447) (57,572) (35,794) (215,019) (59,889)
---------- --------- --------- ---------- ---------
Cash flows from
financing
activities:
Proceeds from
stock options
and employee
stock purchase
plans 6,876 10,286 5,862 17,162 20,576
Proceeds from
convertible
subordinated
notes - 250,000 - 250,000 -
Proceeds from
loan payable 44,656 24,607 - 69,263 -
Repayment of
borrowings
under credit
line - - - - (30,000)
Repayment of
capital lease
and other
financing
obligations (480) (465) (375) (945) (739)
Repayment of
mortgage
payable (533) (497) (311) (1,030) (516)
Debt issuance
costs - (10,678) - (10,678) -
Other financing
activities - - 200 - 570
---------- --------- --------- ---------- ---------
Net cash
provided by
(used in)
financing
activities 50,519 273,253 5,376 323,772 (10,109)
---------- --------- --------- ---------- ---------
Effect of foreign
currency exchange
rates on cash and
cash equivalents 355 143 27 498 184
---------- --------- --------- ---------- ---------
Net increase
(decrease) in
cash, cash
equivalents and
investments (68,433) 235,918 (14,284) 167,485 (40,916)
Cash, cash
equivalents and
investments at
beginning of
period 392,399 156,481 162,223 156,481 188,855
---------- --------- --------- ---------- ---------
Cash, cash
equivalents and
investments at
end of period $ 323,966 $392,399 $147,939 $ 323,966 $147,939
========== ========= ========= ========== =========
Free cash flow (2) $(119,307) $(37,478) $(19,687) $(156,785) $(30,991)
========== ========= ========= ========== =========
Adjusted free cash
flow (3) $ (70,267) $(30,978) $ (9,921) $(101,245) $(21,225)
========== ========= ========= ========== =========
- -------------------
(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 $ 38,140 $ 20,094 $ 16,107 $ 58,234 $ 28,898
Net cash used in
investing
activities as
presented above (157,447) (57,572) (35,794) (215,019) (59,889)
---------- --------- --------- ---------- ---------
Free cash flow $(119,307) $(37,478) $(19,687) $(156,785) $(30,991)
========== ========= ========= ========== =========
(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) $(119,307) $(37,478) $(19,687) $(156,785) $(30,991)
Less purchase of
Los Angeles IBX
property 49,040 - - 49,040 -
Less purchase of
San Jose IBX
property - 6,500 - 6,500 -
Less purchase of
Chicago IBX
property - - 9,766 - 9,766
---------- --------- --------- ---------- ---------
Adjusted free
cash flow $ (70,267) $(30,978) $ (9,921) $(101,245) $(21,225)
========== ========= ========= ========== =========
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