Equinix Reports Fourth Quarter And Full Year 2019 Results
Equinix, Inc., the global interconnection and data center company, today reported results for the quarter and year ended December 31, 2019. Equinix uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements. All per share results are presented on a fully diluted basis.
2019 Results Summary
- $5.562 billion, a 10% increase over the previous year or a normalized and constant currency increase of 9%
- Operating Income
- $1.170 billion, a 20% increase over the previous year, and an operating margin of 21%
- Adjusted EBITDA
- $2.688 billion, a 48% adjusted EBITDA margin
- Includes $9 million of integration costs
- Net Income and Net Income per Share attributable to Equinix
- $507 million, a 39% increase over the previous year
- $5.99 per share, a 31% increase over the previous year
- AFFO and AFFO per Share
- $1.931 billion, a 16% increase over the previous year or 13% on a normalized and constant currency basis
- $22.81 per share, a 10% increase over the previous year or 8% on a normalized and constant currency basis
- Includes $9 million of integration costs
2020 Annual Guidance Summary
- $6.000 - $6.050 billion, an 8 - 9% increase over the previous year, both on an as-reported and normalized and constant currency basis
- Adjusted EBITDA
- $2.858 - $2.908 billion, a 48% adjusted EBITDA margin
- Assumes $10 million of integration costs
- AFFO and AFFO per Share
- $2.108 - $2.158 billion, an increase of 9 - 12% over the previous year or a normalized and constant currency increase of 11 - 14%
- $24.42 - $25.00 per share, an increase of 7 - 10% over the previous year or a normalized and constant currency increase of 9 - 11%
- Assumes $10 million of integration costs
Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, stock-based compensation, 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 without unreasonable effort. The impact of such adjustments could be significant.
Charles Meyers, President and CEO, Equinix:
"2019 was a great year for Equinix, delivering $5.6 billion of revenue, ahead of our expectations, as we continue to drive value on both the top-line and at the per-share level. The pace of digital transformation continues to accelerate, creating seismic shifts across industries as businesses embrace interconnection as critical to their infrastructure strategy, and adopt hybrid and multicloud as the clear architecture of choice. In 2020, we will continue our focus on evolving Platform Equinix, adding new capabilities and service offerings to meet the digital transformation needs of our customers, expanding our global reach and scaling our go-to-market engine to execute on the opportunity ahead. We are excited about the year ahead and continuing to build a company that is simultaneously driving great business results and positively impacting our world."
- Equinix continues to progress its vision to evolve Platform Equinix® into a global platform that interconnects and integrates global businesses at the digital edge. On January 14, 2020, Equinix announced it signed a definitive agreement to acquire Packet, the leading bare metal automation platform. Equinix intends to leverage the Packet offering to accelerate the development and delivery of its interconnected edge services. By integrating Packet's innovative and developer-oriented bare metal service offering, Equinix intends to create a world-class, enterprise-grade bare metal offering that will allow customers to rapidly deploy digital infrastructure, within minutes, at global scale.
- In January, Equinix was named a leader in IDC's first-ever assessment of the colocation and interconnection services vendor market using the IDC MarketScape model. The IDC MarketScape report for Worldwide Colocation and Interconnection Services 2019-2020 vendor assessment (doc #US4517419, December 2019) is a key milestone in the evolution of the data center and networking industry, as it reflects the demand for colocation and interconnection. The recognition of Equinix as a leader in this report underscores the value of Platform Equinix and highlights the competitive advantages that Equinix has over its competitors.
- Equinix continued to expand the reach of its global platform and currently operates across 55 metros in 26 countries including the recently completed acquisition of three Axtel data centers that serve two new strategic technology metros in Mexico. And, the company plans to build out new markets in Hamburg and Muscat this year. The benefit of this unparalleled reach is reflected in strong cross-regional activity with customer deployments across multiple metros increasing to 87% of total recurring revenues.
- Interconnection revenues grew 13% year-over-year on an as-reported basis and 14% on a normalized and constant currency basis, driven by strong customer response to Equinix Cloud Exchange Fabric™ (ECX Fabric™), good traction in new internet exchange markets, and solid interconnection net adds. Today, Equinix has the most comprehensive global interconnection platform, now comprising over 363,000 physical and virtual interconnections. The company delivered its twelfth consecutive quarter of adding more interconnections than the rest of its top 10 competitors combined. In Q4, Equinix added an incremental 7,400 interconnections, fueled by high gross adds from new streaming services, expanding inter-metro connections, and seasonably lower churn. Peak internet exchange traffic grew by 10% this quarter, helped by new OTT video offerings.
- Equinix achieved its second best gross and net bookings this quarter with strong performance across all three regions (Americas, EMEA and Asia-Pacific) and notable momentum in Asia-Pacific. In 2019, Equinix closed over 17,000 deals, demonstrating the tremendous scale of the company's go-to-market engine and the differentiated nature of the Equinix value proposition. In Q4, Equinix achieved a record number of new wins across multiple verticals. The content and digital media vertical experienced record bookings led by Asia-Pacific and strength in the gaming, publishing and eCommerce sectors as digital transformation continues to shape this vertical. The financial services vertical achieved its third highest bookings led by capital markets providers and multinational financials as cloud adoption accelerates.
- Equinix continues to make significant progress with the company's hyperscale strategy with six announced projects underway across all three regions and a strong pipeline of customer demand. In Q4, Equinix announced the completion of the formation of the greater than US$1.0 billion joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund, to develop and operate xScale™ data centers in Europe. Equinix is advancing additional joint venture conversations in Japan and other targeted geographies.
- Equinix's financial strength remains a significant and strategic advantage. Equinix leveraged the company's newly achieved investment-grade rating to reduce its interest burden as demonstrated by raising $2.8 billion in debt during Q4 to refinance a portion of the company's outstanding high-yield debt at more favorable rates.
For the first quarter of 2020, Equinix expects revenues to range between $1.450 and $1.460 billion, an increase of 3% quarter-over-quarter at the midpoint or 2% on a normalized and constant currency basis. This guidance includes a foreign currency benefit of $4 million when compared to the average FX rates in Q4 2019 and $5 million in revenues from the Axtel acquisition. Adjusted EBITDA is expected to range between $686 and $696 million, which includes a $2 million foreign currency benefit when compared to the average FX rates in Q4 2019. Adjusted EBITDA includes $4 million of integration costs related to acquisitions. Recurring capital expenditures are expected to range between $19 and $29 million.
For the full year of 2020, total revenues are expected to range between $6.000 and $6.050 billion, an 8 - 9% increase over the previous year, on both an as-reported and normalized and constant currency basis. This guidance includes a negative foreign currency impact of $12 million when compared to the average FX rates in 2019 and $18 - $22 million in revenues from the Axtel acquisition. Adjusted EBITDA is expected to range between $2.858 and $2.908 billion, an adjusted EBITDA margin of 48%. This adjusted EBITDA includes a negative foreign currency impact of $8 million when compared to the average FX rates in 2019, higher utilities and property tax expenses and strategic investments in Go-to-Market and Product initiatives. For the year, the company expects to incur $10 million in integration costs related to acquisitions. AFFO is expected to range between $2.108 and $2.158 billion, an increase of 9 - 12% over the previous year, or a normalized and constant currency increase of 11 - 14%. This AFFO guidance includes $10 million in integration costs related to acquisitions. AFFO per share is expected to range between $24.42 and $25.00, an increase of 9 - 11% over the previous year, on a normalized and constant currency basis. Non-recurring capital expenditures are expected to range between $1.880 and $2.070 billion and recurring capital expenditures are expected to range between $170 and $180 million.
The U.S. dollar exchange rates used for 2020 guidance, taking into consideration the impact of our current foreign currency hedges, have been updated to $1.15 to the Euro, $1.32 to the Pound, S$1.34 to the U.S. dollar, ¥109 to the U.S. dollar and R$4.02 to the U.S. dollar. The Q4 2019 global revenue breakdown by currency for the Euro, British Pound, Singapore Dollar, Japanese Yen and Brazilian Real is 20%, 9%, 7%, 6% and 3%, respectively.
The adjusted EBITDA guidance is based on the revenue guidance less our expectations of cash cost of revenues and cash operating expenses. The AFFO guidance is based on the adjusted EBITDA guidance less our expectations of net interest expense, an installation revenue adjustment, a straight-line rent expense adjustment, a contract cost adjustment, amortization of deferred financing costs and debt discounts and premiums, income tax expense, an income tax expense adjustment, recurring capital expenditures, other income (expense), (gains) losses on disposition of real estate property and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items.
Industry: Data Centre / Data Center
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