10-QPeriod: Q3 FY2016

EQUINIX INC Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 4, 2016For Securities:EQIX

Summary

Equinix, Inc. (EQIX) reported its third-quarter 2016 financial results, showcasing significant revenue growth driven by strategic acquisitions, notably the TelecityGroup and Bit-isle acquisitions, which have expanded its global data center footprint. For the three months ended September 30, 2016, total revenues increased by 35% year-over-year to $924.7 million, with a strong performance across all geographic segments, particularly EMEA, which saw a 70% surge in revenue largely due to the TelecityGroup integration. The company also reported a 21% increase in income from continuing operations to $170.0 million, reflecting effective cost management and operational efficiencies despite increased acquisition and integration costs. Equinix's balance sheet shows substantial growth in assets, driven by property, plant, and equipment, and significant increases in goodwill and intangible assets, reflecting the impact of its aggressive acquisition strategy. Total assets grew to $13.1 billion from $10.4 billion at the end of 2015. The company's liquidity remains solid, with $987.9 million in cash and cash equivalents, and access to a $1.5 billion revolving credit line. Management expressed confidence in its ability to fund ongoing expansion projects and meet its financial obligations, including regular dividend payments.

Financial Highlights

54 data points
Beta

Revenue

$924.68M

49.1% Gross Margin

Net Income

$51.45M

5.6% Net Margin

EPS (Diluted)

$0.72

Total Assets

$13.10B

Cash & Equivalents

$987.91M

Free Cash Flow

$56.16M

Financial Statements
Beta
Revenue$924.68M
Cost of Revenue$470.30M
Gross Profit$454.37M
Operating Expenses$754.74M
Operating Income$169.94M
Interest Expense$92.20M
Net Income$51.45M
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)71.19M
Shares Outstanding (Diluted)71.91M

Key Highlights

  • 1Total revenues increased 35% year-over-year to $924.7 million for the third quarter of 2016.
  • 2Income from continuing operations grew 21% year-over-year to $170.0 million.
  • 3The TelecityGroup acquisition significantly boosted EMEA revenues, contributing $108.8 million in the quarter.
  • 4The company experienced strong growth in Asia-Pacific revenues, up 57% year-over-year, driven by the Bit-isle acquisition.
  • 5Total assets increased to $13.1 billion from $10.4 billion at the end of 2015, reflecting acquisition activity.
  • 6Cash and cash equivalents stood at $987.9 million as of September 30, 2016.
  • 7The company paid quarterly cash dividends of $1.75 per share, demonstrating a commitment to shareholder returns.

Frequently Asked Questions

Equinix's revenue growth in Q3 2016 was primarily driven by its strategic acquisitions, most notably the TelecityGroup acquisition which significantly boosted EMEA revenues, and the Bit-isle acquisition which contributed to strong Asia-Pacific revenue growth. Organic growth from existing and newly opened data centers also contributed to the overall increase.

These acquisitions significantly expanded Equinix's global footprint and were reflected in substantial increases in property, plant, and equipment, as well as goodwill and intangible assets on the balance sheet. Total assets grew by approximately $2.7 billion during the first nine months of the year. While these acquisitions increased debt and integration costs, they also provided substantial revenue growth and market expansion.

Equinix maintained a strong liquidity position with $987.9 million in cash and cash equivalents as of September 30, 2016. Additionally, the company has access to a $1.5 billion revolving credit line. Management expressed confidence that existing cash, anticipated operating cash flow, and available credit facilities are sufficient to meet operational needs, dividend payments, and ongoing expansion projects.

Interest expense increased in the nine months ended September 30, 2016, primarily due to debt incurred to finance the TelecityGroup and Bit-isle acquisitions, as well as new senior notes issued. The company expects interest expense to remain elevated and potentially increase further as it continues to finance growth and acquisition opportunities.