10-QPeriod: Q2 FY2020

EQUINIX INC Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 31, 2020For Securities:EQIX

Summary

Equinix Inc. (EQIX) reported its second-quarter 2020 financial results, demonstrating resilience and growth despite the ongoing COVID-19 pandemic. The company saw a solid increase in revenues across all geographic segments, driven by strong recurring revenue from existing customers and incremental contributions from recent acquisitions. While operating expenses saw increases due to these acquisitions and increased compensation, the company managed to maintain profitability and cash flow. Key financial highlights include robust revenue growth, particularly in recurring revenue streams. The company continued its strategic expansion through acquisitions and joint ventures, including significant capital investments. Despite some cost increases and the impacts of COVID-19, such as a modest increase in the allowance for doubtful accounts and some reduced non-recurring revenue, Equinix maintained operational stability and a strong liquidity position, with substantial cash reserves and available borrowing capacity.

Financial Highlights

53 data points
Beta

Revenue

$1.47B

49.7% Gross Margin

Net Income

$133.35M

9.1% Net Margin

EPS (Diluted)

$1.52

Total Assets

$27.79B

Cash & Equivalents

$4.81B

Free Cash Flow

$574.69M

Financial Statements
Beta
Revenue$1.47B
Cost of Revenue$739.34M
Gross Profit$730.78M
Operating Expenses$1.19B
Operating Income$282.49M
Interest Expense$108.48M
Net Income$133.35M
EPS (Basic)$1.53
EPS (Diluted)$1.52
Shares Outstanding (Basic)87.30M
Shares Outstanding (Diluted)87.90M

Key Highlights

  • 1Total revenues increased by 6% year-over-year to $1.47 billion for the three months ended June 30, 2020, driven by a 7% increase in recurring revenues.
  • 2The company completed two significant acquisitions in early 2020: Packet Host, Inc. for approximately $290.3 million and three data centers in Mexico from Axtel for approximately $189.0 million.
  • 3Adjusted EBITDA increased by 6% year-over-year to $720.0 million for the three months ended June 30, 2020.
  • 4AFFO attributable to common shareholders increased by 12% year-over-year to $557.8 million for the three months ended June 30, 2020.
  • 5Cash, cash equivalents, and short-term investments stood at $4.8 billion as of June 30, 2020, providing strong liquidity.
  • 6Equinix announced a new joint venture with GIC to develop xScale data centers in Asia-Pacific, building on a similar successful venture in Europe.
  • 7The company continued to manage its debt effectively, issuing new senior notes and redeeming existing ones, while maintaining a strong available borrowing capacity under its revolving credit facility.

Frequently Asked Questions

Equinix stated that the COVID-19 pandemic did not have a material impact on its financial statements during the six months ended June 30, 2020. The company experienced an insignificant revenue reserve related to COVID-19 and a decline in non-recurring revenue from Smart Hands services. They also increased their allowance for doubtful accounts by $6.3 million but saw offsetting benefits from lower travel expenses. All IBX data centers remained operational.

Revenue growth was primarily driven by an increase in recurring revenues, which increased by 7% year-over-year. This growth was supported by incremental revenues from recent acquisitions (Packet Host and Axtel) and from newly opened IBX data centers and expansions. Growth was also observed across all geographic segments (Americas, EMEA, and Asia-Pacific).

Equinix maintained a strong liquidity position with $4.8 billion in cash, cash equivalents, and short-term investments as of June 30, 2020. The company also had approximately $1.9 billion of additional liquidity available under its revolving credit facility. During the quarter, Equinix issued $2.6 billion in Senior Notes and successfully repaid outstanding balances on its 364-day term loan facilities.

Equinix completed the acquisitions of Packet Host, Inc. and three data centers in Mexico. Additionally, the company entered into an agreement to form a second joint venture with GIC for xScale data centers in the Asia-Pacific region. They also entered into an agreement to purchase 13 data center sites in Canada from BCE Inc.