10-QPeriod: Q1 FY2011

EQUINIX INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 29, 2011For Securities:EQIX

Summary

Equinix Inc. (EQIX) reported its first quarter 2011 financial results, demonstrating significant year-over-year revenue growth driven by both organic expansion and the impact of the Switch & Data acquisition. Total revenues increased by 46% to $363.0 million, with recurring revenues making up 95% of the total. The company also saw substantial growth in its customer base, up 49% year-over-year, reflecting increased demand for its data center services across its global footprint. Operationally, Equinix highlighted strong performance in its Americas segment, which benefited significantly from the Switch & Data acquisition. All segments, Americas, EMEA, and Asia-Pacific, experienced revenue growth. The company also made strategic investments in its infrastructure, particularly with the acquisition of ALOG Data Centers in Brazil and the development of new IBX data centers. Despite increased interest expenses and capital expenditures related to expansion, Equinix managed its finances effectively, with a healthy cash position and available liquidity to fund its growth initiatives.

Financial Highlights

46 data points
Beta

Revenue

$363.03M

46.1% Gross Margin

Net Income

$25.14M

6.9% Net Margin

EPS (Diluted)

$0.53

Total Assets

$4.65B

Cash & Equivalents

$304.47M

Free Cash Flow

-$57.34M

Financial Statements
Beta
Revenue$363.03M
Cost of Revenue$194.58M
Gross Profit$167.34M
Operating Expenses$291.72M
Operating Income$71.31M
Interest Expense$37.36M
Net Income$25.14M
EPS (Basic)$0.54
EPS (Diluted)$0.53
Shares Outstanding (Basic)46.45M
Shares Outstanding (Diluted)47.22M

Key Highlights

  • 1Revenue increased by 46% to $363.0 million for the three months ended March 31, 2011, compared to $248.6 million in the prior year period.
  • 2Total customers grew by 49% year-over-year to 4,046 as of March 31, 2011, driven by both acquisitions and organic growth.
  • 3The Americas segment showed strong revenue growth of 57% year-over-year, significantly boosted by the Switch & Data acquisition.
  • 4Net income increased to $25.1 million ($0.53 per diluted share) from $14.2 million ($0.35 per diluted share) in the same period last year.
  • 5Cash flows from operating activities were $117.7 million, an increase from $99.8 million in the prior year period, supporting ongoing investments.
  • 6The company completed the acquisition of approximately 90% of ALOG Data Centers do Brasil S.A. (ALOG) in April 2011, expanding its presence in South America.
  • 7Capital expenditures increased to $190.1 million in the quarter, reflecting ongoing investments in IBX data center expansions and development.

Frequently Asked Questions

Equinix reported a 46% increase in revenue to $363.0 million for the three months ended March 31, 2011, up from $248.6 million in the same period of 2010. This growth was primarily driven by a 57% increase in the Americas segment due to the Switch & Data acquisition, alongside strong organic growth across all geographic regions (EMEA and Asia-Pacific also saw revenue increases).

The acquisition of Switch & Data, completed in April 2010, significantly contributed to the year-over-year growth. It added approximately $60.3 million in revenue and $41.5 million in cost of revenues to the Americas segment in the first quarter of 2011. The acquisition also influenced sales and marketing and general and administrative expenses.

Equinix has a strong cash position and anticipates sufficient cash flow from operations to meet its needs. The company is actively investing in expansion, including new IBX data centers and strategic acquisitions like ALOG in Brazil. While current liquidity is adequate, the company may seek additional debt or equity financing for future expansion opportunities if market conditions permit.

Equinix is involved in several legal proceedings, including historical IPO litigation that has reached a settlement phase with appeals ongoing, and more recent class action and derivative lawsuits related to disclosures. The company believes these matters will not have a material impact but cannot predict the ultimate outcome.