01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. Cited figures are marked; the original filing is the authoritative source.
Equinix (EQIX) closed fiscal 2021 with record revenue of $6.64 billiona, up 11% year over year (10% in constant currency), and income from operations of $1.11 billion, up 5%.
Adjusted EBITDA rose 10% to $3.14 billionb, and AFFO grew 12% to $2.45 billion, reflecting a largely recurring revenue base (about 94% of revenue) and a cost structure that is mostly fixed. Net income attributable to Equinix was $500 million, or $5.53 diluted EPS, compared with $4.18 in 2020. The company opened nine IBX sites and six xScale sites, bringing its footprint to 240 data centers across 66 markets, and it announced the acquisitions of GPX India (completed, $170.5 million) and MainOne in West Africa ($320 million enterprise value, expected to close in Q2 2022).
The balance sheet and capital plan are the main areas for investor scrutiny. Total debt was about $13.9 billionc (gross), with $11.1 billion of senior notes, and cash was $1.5 billion. Capital expenditures rose to $2.75 billion, and the company continued to fund growth through a mix of debt, joint ventures with GIC and PGIM, and an at-the-market equity program with $1.0 billion of capacity remaining.
Cabinet utilization was steady at about 79%d, and the company flagged rising power costs (notably in Singapore), inflation, and construction supply-chain pressures as the key risks to its 2022 outlook. Equinix also operates as a REIT, and the filing discusses the REIT asset tests and distribution requirements, which are an ongoing structural consideration for investors.
For investors, the filing shows a growing, highly recurring business with strong cash generation (operating cash flow of $2.55 billion), offset by heavy capital intensity, rising leverage, and exposure to energy costs and FX. The Part III items (executive compensation, ownership, and governance) are incorporated by reference from the 2022 proxy statement and are not covered in this 10-K.
02—Key points
Key Highlights
- Revenue reached $6.64 billion in 2021, up 11% (10% constant currency), with recurring revenue at 94% of the total.
- Adjusted EBITDA grew 10% to $3.14 billion, and AFFO rose 12% to $2.45 billion, driven by IBX expansions and organic growth.
- Diluted EPS was $5.53, up from $4.18 in 2020, although 2021 benefited from a $69.8 million reversal of uncertain tax positions.
- The footprint expanded to 240 IBX and xScale data centers across 66 markets, with nine new IBX sites and six new xScale sites opened in 2021.
- Capital expenditures rose to $2.75 billion, and the company has about $1.0 billion of unaccrued capex commitments and $1.0 billion of ATM equity capacity remaining.
- Total gross debt was about $13.9 billion, and the company flagged rising power costs (especially in Singapore), inflation, and supply-chain delays as risks to 2022 projections.
- Acquisitions expanded the footprint into India (GPX, $170.5 million, completed) and West Africa (MainOne, $320 million enterprise value, pending).
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Equinix kept $0.08.
- Revenue$6.64B100.0%
- Cost of revenue−$3.47B52.3%
- Gross profit$3.16B47.7%
- Operating costs−$2.05B31.0%
- Operating income$1.11B16.7%
- Interest, other & tax−$608.4M9.2%
- Net income$499.7M7.5%
Where FY2021 revenue went
$6.64B- Cost of revenue: $3.47B, 52% of revenue
- Operating costs: $2.05B, 31% of revenue
- Net income: $499.7M, 7.5% of revenue
- Interest, other & tax: $608.4M, 9.2% of revenue
Kept 7.5% as net incomeNet income $499.7M · 7.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $6.64B$6.00B | +10.6% |
| Cost of Revenue | $3.47B$3.07B | +12.9% |
| Gross Profit | $3.16B$2.92B | +8.2% |
| Operating Expenses | $5.53B$4.95B | +11.8% |
| Operating Income | $1.11B$1.05B | +5.2% |
| Interest Expense | $336.08M$406.47M | −17.3% |
| Net Income | $499.73M$370.07M | +35.0% |
| EPS (Basic) | $5.57$4.22 | +32.0% |
| EPS (Diluted) | $5.53$4.18 | +32.3% |
| Shares Outstanding (Basic) | 89.77M87.70M | +2.4% |
| Shares Outstanding (Diluted) | 90.41M88.41M | +2.3% |
05—Questions
Frequently Asked Questions
How did Equinix perform financially in 2021?
Revenue rose 11% to $6.64 billion, income from operations rose 5% to $1.11 billion, and net income attributable to Equinix was $500 million. Adjusted EBITDA grew 10% to $3.14 billion, and AFFO grew 12% to $2.45 billion. Growth was driven mainly by IBX expansions, acquisitions (Packet and Bell), and organic demand, while higher depreciation and G&A costs reduced margin growth in the Americas.
How much debt does Equinix carry, and how is it managing it?
Total gross indebtedness was about $13.9 billion at year-end 2021, including $11.1 billion of senior notes, against $1.5 billion of cash and $1.9 billion of available revolver capacity. In 2021 the company issued about $3.9 billion of senior notes across several currencies and used the proceeds to repay higher-cost debt, which lowered interest expense to $336 million from $406 million. The filing also flags rising interest-rate and refinancing risk, and a $4.0 billion revolver and new term loan were put in place in January 2022.
What are the main risks investors should monitor?
Key risks include rising and volatile power costs (notably in Singapore), inflation and construction delays that could increase expansion costs, customer concentration in the 50 largest customers (about 39% of recurring revenue), foreign currency exposure (about 61% of revenue came from outside the U.S.), and the risk of losing REIT status, which depends on complex asset and distribution tests. The company also notes ongoing COVID-19 uncertainty and integration risk from acquisitions and joint ventures.
What is Equinix's growth strategy beyond organic expansion?
Equinix uses joint ventures with sovereign and institutional partners (GIC and PGIM) to fund xScale hyperscale data centers, keeping an 20% equity stake in most of them while Equinix operates the facilities. Pending and recent acquisitions, including MainOne in Africa and GPX in India, extend its reach into new markets. Management expects the xScale portfolio to exceed $7.5 billion across 34 facilities once completed.
06—Continue