Equinix Reports First Quarter 2006 Results.FOSTER CITY, Calif. -- Equinix Equinix, Inc. NASDAQ: EQIX, is a U.S. public corporation that provides carrier-neutral datacenters and internet exchanges. Services Equinix network-neutral data center (IBX or "Internet Business Exchange") and Internet exchange services include premium colocation, IP , Inc. (Nasdaq:EQIX): --Increased revenues to $64.9 million, a 5% increase over the previous quarter and a 33% increase over the same quarter last year --Increased EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , a non-GAAP financial measure, to $22.8 million --Signed 61 new customers including McGraw-Hill The McGraw-Hill Companies, Inc., (NYSE: MHP) is a publicly traded corporation headquartered in Rockefeller Center in New York City. Its primary areas of business are education, publishing, broadcasting, and financial and business services. , Trip Advisor and YouTube A popular Web video sharing site that lets anyone store short videos for private or public viewing. Founded in 2005 by Chad Hurley, Steve Chen and Jawed Karim, it was acquired by Google in 2006 for $1.65 billion. --Raises annual revenue guidance to $280.0 to $286.0 million and EBITDA guidance to $100.0 to $105.0 million Equinix, Inc. (Nasdaq:EQIX), the leading provider of network-neutral data centers and Internet exchange See IXP and NAP. services, today reported its quarterly results for the period ended March 31, 2006. Revenues were $64.9 million for the first quarter, a 5% increase over the previous quarter and a 33% increase over the same quarter last year. Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenues, consisting primarily of colocation See co-location. , interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. and managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality , were $61.8 million, a 6% increase over the previous quarter and a 35% increase over the same quarter last year. Non-recurring revenues were $3.1 million in the quarter, consisting primarily of professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. and installation fees. Note: Equinix uses non-GAAP financial measures, such as EBITDA, cash cost of revenues, cash gross margins, cash operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (also known as cash selling, general and administrative expenses or cash SG&A), non-GAAP net income (loss), free cash flow and adjusted free cash flow to evaluate its operations. A reconciliation of these non-GAAP financial measures to the most closely applicable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measure is attached to this release and commences at the bottom of our condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations -- GAAP presentation. Cost of revenues were $43.3 million for the first quarter, including $758,000 of stock-based compensation, a 4% increase over the previous quarter and an 18% increase over the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the and stock-based compensation of $18.0 million, were $25.3 million for the first quarter, flat over the previous quarter and a 15% increase over the same quarter last year. Cash gross margins, defined as gross profit less depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 61%, up from 59% the previous quarter and 55% the same quarter last year. Selling, general and administrative expenses were $24.3 million for the first quarter, including $7.0 million of stock-based compensation, a 41% increase over the previous quarter and a 59% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $7.5 million, were $16.8 million for the first quarter, a 13% increase over the previous quarter and a 35% increase over same quarter last year. Net loss for the first quarter, including stock-based compensation expense of $7.8 million, was $5.1 million. This represents a basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per share of $0.18 based on a weighted average share count of 27.8 million. Excluding stock-based compensation, the Company was net income positive for the first quarter, with a non-GAAP net income of $2.7 million. This was down $508,000 from the previous quarter's result of $3.2 million, and a $6.0 million improvement over the same quarter last year. EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation expense and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , for the first quarter was $22.8 million, up 5% over the previous quarter and up from $14.3 million the same quarter last year. Capital expenditures in the first quarter were $26.6 million, of which $6.9 million was attributed to ongoing capital expenditures and $19.7 million was attributed to expansion capital expenditures. The Company generated cash from operating activities of $12.8 million as compared to $18.6 million in the previous quarter. Cash used in investing activities was $24.1 million as compared to $65.9 million in the previous quarter. Adjusted free cash flow was a negative $11.3 million in the first quarter. Adjusted free cash flow is defined as net cash generated from operating activities less net cash used in investing activities (excluding the purchases, sales and maturities of short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments and the purchase and sale of real estate). As of March 31, 2006, the Company's cash, cash equivalents and investments were $162.2 million after repaying $30.0 million under the Silicon Valley Bank line of credit, as compared to $188.9 million in the previous quarter. Other Company Developments & Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. --On a same IBX IBX Independence Blue Cross (Health Insurance Company) IBX Internet Business Exchange IBX Integrated Business Exchange IBX Inner Banks (Foundation of Renewal for Eastern North Carolina) basis (defined as IBX centers which have been available for new customer installs for at least four full quarters), revenues were $62.5 million; cost of revenues were $38.8 million; cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation, were $22.5 million and cash gross margins for the quarter were 64%. EBITDA on a same IBX basis was $23.5 million. These results now include Equinix's Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C. area center opened in December December: see month. 2004. --Equinix added 61 new customers in the quarter including iGames Online, LeBoeuf Lamb, McGraw-Hill, MovieClick, Packet Exchange, Trip Advisor and YouTube. --Over 50 percent of Equinix's new bookings in the quarter came from existing customers including Akamai Technologies Akamai Technologies, Inc. (NASDAQ: AKAM) is a company that provides a distributed computing platform for global Internet content and application delivery, headquartered in Cambridge, Massachusetts. , Cisco Systems “Cisco” redirects here. For other uses, see Cisco (disambiguation). Cisco System,Inc. (NASDAQ: CSCO, HKSE: 4333 ) is an American multinational corporation with 54,000 employees and annual revenue of US $28.48 billion as of 2006. , IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , Salesforce.com Salesforce.com (NYSE: CRM) is an on-demand Customer Relationship Management (CRM) solution vendor. History Origins Salesforce.com was founded in 1999 by former Oracle executive Marc Benioff. and Sony SONY Standard Oil of New York (common, but untrue; it's an urban legend) Computer Entertainment. --Based on a total cabinet capacity of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 26,000, the number of cabinets billing at the end of the quarter was approximately 14,750, or 57%, up from approximately 14,100 the previous quarter. On a weighted average basis, the number of cabinets billing was approximately 14,500, representing a utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be rate of 56%. --U.S. interconnection service revenues were 21% of U.S. recurring revenues for the quarter. Interconnection services represent greater than 19% of total worldwide recurring revenues. Equinix signed additional customers on its new 10 Gigabit Ethernet An Ethernet standard that transmits at 1 Gbps. Used mostly to connect high-end workstations and servers as well as for network backbones, Gigabit Ethernet transmits full duplex from point to point using switches and half duplex in a shared environment (CSMA/CD) using a hub. service including Hurricane hurricane, tropical cyclone in which winds attain speeds greater than 74 mi (119 km) per hr. Wind speeds reach over 190 mi (289 km) per hr in some hurricanes. Electric and UPC (Universal Product Code) The standard bar code printed on retail merchandise, which is administered by GS1 US, Brussels, Belgium and Lawrenceville, NJ (www.gs1.org). Broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). . --After more than six years on the Equinix Board of Directors, Mike Volpi will not stand for re-election re-election n → reelección f re-election n → réélection f re-election n → Wiederwahl f to the Board. Mr. Volpi has decided to dedicate ded·i·cate tr.v. ded·i·cat·ed, ded·i·cat·ing, ded·i·cates 1. To set apart for a deity or for religious purposes; consecrate. 2. more time to his business priorities at Cisco. He will remain on the Equinix Board until June June: see month. 8, 2006. Business Outlook For the second quarter 2006, revenues are expected to be in the range of $67.5 to $68.5 million. Cash gross margins will be approximately 60%. Cash selling, general and administrative expenses are expected to be approximately $16.5 million. EBITDA for the second quarter is expected to be $24.0 to $25.0 million. Net loss is expected to be approximately $5.0 million, including the impact of approximately $8.0 million of stock-based compensation expense. Net interest expense will be approximately $2.0 million. The weighted average shares outstanding will be approximately 28.4 million. Capital expenditures are expected to be approximately $30.0 to $35.0 million, including $20.0 to $25.0 million of expansion capital expenditures. For the full year of 2006, total revenues are expected to be in the range of $280.0 to $286.0 million. Cash gross margins are expected to be in the range of 58% to 60%, including the full year impact of approximately $4.0 million of additional cost of revenues from three new IBX centers. Cash selling, general and administrative expenses are expected to be approximately $64.0 million, including approximately $4.4 million of investments in expansion efforts. EBITDA for the year is expected to be $100.0 to $105.0 million. Net loss for the year is expected to be approximately $15.0 million, including the impact of approximately $30.0 million of stock-based compensation expense. Net interest expense will be approximately $9.0 million. Capital expenditures for 2006 are expected to be in a range of $100.0 to $105.0 million, comprised of approximately $25.0 million of ongoing capital expenditures and $75.0 to $80.0 million of expansion capital expenditures for the build out of the Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and Silicon Valley expansions, as well as the expansion build out in the Washington, D.C. area campus. We expect our adjusted free cash flow to be in a range of negative $5.0 to $10.0 million for the year. Adjusted free cash flow is defined as net cash generated from operating activities less net cash used in investing activities (excluding the purchases, sales and maturities of short-term and long-term investments, as well as purchases and sales of real estate). The Company will discuss first quarter results on Wednesday Wednesday: see week. , April 26, 2006, at 5:30 p.m. ET (2:30 p.m. PT). To hear the conference call live, please dial 773-799-3263 (domestic and international) and reference the passcode (EQIX). A simultaneous live Webcast of the call will be available over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.equinix.com, under the Investor Relations Investor relations The process by which the corporation communicates with its investors. heading. A replay of the call will be available beginning on Wednesday, April 26, 2006 at 7:30 p.m. (ET) by dialing 203-369-3395. In addition, the Webcast will be available on the company's Web site at www.equinix.com. No password A secret word or code used to serve as a security measure against unauthorized access to data. It is normally managed by the operating system or DBMS. However, the computer can only verify the legitimacy of the password, not the legitimacy of the user. See NCSC. is required for either method of replay. A reconciliation between GAAP information and non-GAAP information contained in this press release is provided in a table immediately following the Condensed Consolidated Statements of Operations -- GAAP Presentation. This reconciliation is also available at www.equinix.com under the Investor Relations heading. About Equinix Equinix is the leading global provider of network-neutral data centers and Internet exchange services for enterprises, content companies, systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. and network services providers. Through the company's Internet Business Exchange(TM) (IBX(R)) centers in 11 markets in the U.S. and Asia, customers can directly interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. with every major global network and ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. for their critical peering, transit transit, in astronomy, passage of a body across a meridian or passage of a small body across the visible disk of a larger one. (The passage of a large body across a smaller one is called an eclipse or occultation. and traffic exchange requirements. These interconnection points facilitate the highest performance and growth of the Internet by serving as neutral and open marketplaces for Internet infrastructure services, allowing customers to expand their businesses while reducing costs. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; a failure to receive significant revenue from customers in recently-acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. ; the loss or decline in business from our key customers and other risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent quarterly and annual reports and registration statement on Form S-3 filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information contained in this press release. Equinix and IBX are registered trademarks of Equinix, Inc. Internet Business Exchange is a trademark of Equinix, Inc. Non-GAAP Financial Measures Equinix continues to provide all information required in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Equinix uses non-GAAP financial measures, such as EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), non-GAAP net income (loss), free cash flow and adjusted free cash flow to evaluate its operations. In presenting these non-GAAP financial measures, Equinix excludes certain non-cash or non-recurring items that it believes are not good indicators of the Company's current or future operating performance. These non-cash or non-recurring items are depreciation, amortization, accretion, stock-based compensation and restructuring charges. Recent legislative and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes encourage use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. Equinix excludes these non-cash or non-recurring items in order for Equinix's lenders, investors, and industry analysts who review and report on the Company, to better evaluate the Company's operating performance and cash spending levels relative to its industry sector and competitor base. Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of our IBX centers and IBX expansion projects or acquired IBX centers and do not reflect our current or future cash spending levels to support our business. Our IBX centers are long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets, and have an economic life greater than ten years. The construction costs of our IBX centers do not recur and future capital expenditures remain minor relative to our initial investment. This is a trend we expect to continue. In addition, depreciation is also based on the estimated useful lives of our IBX centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX centers, and are not indicative indicative: see mood. of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations. In addition, in presenting the non-GAAP financial measures, Equinix excludes amortization expense related to certain intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , as it represents a non-cash cost that may not recur and is not a good indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the Company's current or future operating performance. Equinix excludes accretion expense In accounting, accretion expense is the expense created when updating the present value(PV) of a financial instrument. For example, if one originally recognizes the present value of a liability at $650, which has a future value (FV) of $1000, every year one must increase the , both as it relates to its asset retirement obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. as well as its accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. restructuring charge liabilities, as these expenses represent costs, which Equinix believes are not meaningful in evaluating the Company's current operations. Equinix excludes non-cash stock-based compensation expense as it represents expense attributed to stock awards that have no current or future cash obligations. As such, we, and our investors and analysts, exclude this stock-based compensation expense when assessing the cash generating performance of our operations. The restructuring charges relate to the Company's decision to exit leases for excess space adjacent to several of our IBX centers, which we do not intend to build out now or in the future. Management believes such restructuring charges were unique costs that are not expected to recur, and consequently, does not consider these charges as a normal component of expenses related to current and ongoing operations. Our management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. However, we have presented such non-GAAP financial measures to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what management believes to be our ongoing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Management believes that the inclusion of these non-GAAP financial measures provide consistency Consistency can refer to:
v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. Equinix effectively. Investors should note, however, that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. In addition, whenever Equinix uses such non-GAAP financial measures, it provides a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure. Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, net income (loss) from operations, interest income, 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. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how it was calculated for the three months ended March 31, 2006 and 2005, presented within this press release.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION
(in thousands, except per share detail)
(unaudited)
Three Months Ended
------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ----------
Recurring revenues $61,752 $58,380 $45,901
Non-recurring revenues 3,117 3,418 2,783
------------ ------------ ----------
Revenues 64,869 61,798 48,684
Cost of revenues 43,345 41,715 36,873
------------ ------------ ----------
Gross profit 21,524 20,083 11,811
------------ ------------ ----------
Operating expenses:
Sales and marketing 7,198 5,759 4,819
General and administrative 17,130 11,516 10,489
Restructuring charges - 33,814 -
------------ ------------ ----------
Total operating expenses 24,328 51,089 15,308
------------ ------------ ----------
Income (loss) from operations (2,804) (31,006) (3,497)
------------ ------------ ----------
Interest and other income
(expense):
Interest income 1,611 940 667
Interest expense and other (3,868) (2,548) (2,459)
------------ ------------ ----------
Total interest and other,
net (2,257) (1,608) (1,792)
------------ ------------ ----------
Net loss before income taxes and
cumulative effect of a change in
accounting principle (5,061) (32,614) (5,289)
Income taxes (385) 10 (505)
Net loss before cumulative effect
of a change in accounting ------------ ------------ ----------
principle (5,446) (32,604) (5,794)
Cumulative effect of a change
in accounting principle 376 - -
------------ ------------ ----------
Net loss $(5,070) $(32,604) $(5,794)
============ ============ ==========
Net loss per share:
Basic and diluted net loss per share before
cumulative effect of a change in
accounting principle $(0.20) $(1.25) $(0.26)
Cumulative effect of a change in
accounting principle 0.02 - -
------------ ------------ ----------
Basic and diluted net loss per
share $(0.18) $(1.25) $(0.26)
============ ============ ==========
Shares used in computing basic and
diluted net loss per share 27,848 26,100 21,898
============ ============ ==========
----------------------------------------------------------------------
Non-GAAP net income (loss)(1) $2,688 $3,196 $(3,350)
============ ============ ==========
(1) Non-GAAP net income (loss) excludes stock-based compensation and
restructuring charges as follows:
Net loss $(5,070) $(32,604) $(5,794)
Stock-based compensation 7,758 1,986 2,444
Restructuring charges - 33,814 -
------------ ------------ ----------
Non-GAAP net income (loss) $2,688 $3,196 $(3,350)
============ ============ ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
NON-GAAP PRESENTATION
(in thousands)
(unaudited)
Three Months Ended
----------------------------------
March 31, December 31, March 31,
2006 2005 2005
---------- ------------ ----------
Recurring revenues $61,752 $58,380 $45,901
Non-recurring revenues 3,117 3,418 2,783
---------- ------------ ----------
Revenues (1) 64,869 61,798 48,684
Cash cost of revenues (2) 25,272 25,192 21,929
---------- ------------ ----------
Cash gross profit (3) 39,597 36,606 26,755
---------- ------------ ----------
Cash operating expenses (4):
Cash sales and marketing
expenses (5) 5,291 5,332 4,357
Cash general and administrative
expenses (6) 11,471 9,446 8,061
---------- ------------ ----------
Total cash operating
expenses (7) 16,762 14,778 12,418
---------- ------------ ----------
EBITDA (8) $22,835 $21,828 $14,337
========== ============ ==========
Cash gross margins (9) 61% 59% 55%
========== ============ ==========
EBITDA flow-through rate (10) 33% 106% 53%
========== ============ ==========
------------------------------------
(1) The geographic split of our revenues is presented below:
U.S. revenues $55,840 $53,463 $42,016
Asia-Pacific revenues 9,029 8,335 6,668
---------- ------------ ----------
Revenues $64,869 $61,798 $48,684
========== ============ ==========
Revenues on a services basis is presented below:
Colocation $45,569 $43,127 $33,236
Interconnection 11,804 11,181 9,324
Managed infrastructure 3,933 3,760 3,341
Rental 446 312 -
---------- ------------ ----------
Recurring revenues 61,752 58,380 45,901
Non-recurring revenues 3,117 3,418 2,783
---------- ------------ ----------
Revenues $64,869 $61,798 $48,684
========== ============ ==========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Revenues on a
same IBX versus new IBX basis is presented below:
Same IBX centers $62,530 $56,752 $48,457
New IBX centers 2,339 5,046 227
---------- ------------ ----------
Revenues $64,869 $61,798 $48,684
========== ============ ==========
(2) We define cash cost of revenues as cost of revenues less
depreciation, amortization, accretion and stock-based compensation
as presented below:
Cost of revenues $43,345 $41,715 $36,873
Depreciation, amortization and
accretion expense (17,315) (16,523) (14,944)
Stock-based compensation expense (758) - -
---------- ------------ ----------
Cash cost of revenues $25,272 $25,192 $21,929
========== ============ ==========
The geographic split of our cash cost of revenues is
presented below:
U.S. cash cost of revenues $20,951 $20,954 $18,061
Asia-Pacific cash cost of
revenues 4,321 4,238 3,868
---------- ------------ ----------
Cash cost of revenues $25,272 $25,192 $21,929
========== ============ ==========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Cost of
revenues and cash cost of revenues on a same IBX versus new IBX
basis is presented below:
Same IBX centers-cash cost of
revenues $22,476 $21,605 $21,091
Same IBX centers-depreciation,
amortization and accretion
expense 15,532 14,277 14,196
Same IBX centers-stock-based
compensation expense 758 - -
---------- ------------ ----------
Same IBX centers cost of
revenues 38,766 35,882 35,287
---------- ------------ ----------
New IBX centers-cash cost of
revenues 2,796 3,587 838
New IBX centers-depreciation,
amortization and accretion
expense 1,783 2,246 748
New IBX centers-stock-based
compensation expense - - -
---------- ------------ ----------
New IBX centers cost of
revenues 4,579 5,833 1,586
---------- ------------ ----------
Cost of revenues $43,345 $41,715 $36,873
========== ============ ==========
(3) We define cash gross profit as revenues less cash cost of revenues
(as defined above).
(4) We define cash operating expenses as operating expenses less
depreciation, amortization and stock-based compensation. We also
refer to cash operating expenses as cash selling, general and
administrative expenses or "cash SG&A".
(5) We define cash sales and marketing expenses as sales and marketing
expenses less depreciation, amortization and stock-based
compensation as presented below:
Sales and marketing expenses $7,198 $5,759 $4,819
Depreciation and amortization
expense (15) (15) (15)
Stock-based compensation expense (1,892) (412) (447)
---------- ------------ ----------
Cash sales and marketing
expenses $5,291 $5,332 $4,357
========== ============ ==========
(6) We define cash general and administrative expenses as general and
administrative expenses less depreciation, amortization and
stock-based compensation as presented below:
General and administrative
expenses $17,130 $11,516 $10,489
Depreciation and amortization
expense (551) (496) (431)
Stock-based compensation expense (5,108) (1,574) (1,997)
---------- ------------ ----------
Cash general and
administrative expenses $11,471 $9,446 $8,061
========== ============ ==========
(7) Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and marketing
expenses $5,291 $5,332 $4,357
Cash general and administrative
expenses 11,471 9,446 8,061
---------- ------------ ----------
Cash SG&A $16,762 $14,778 $12,418
========== ============ ==========
The geographic split of our cash operating expenses, or
cash SG&A, is presented below:
U.S. cash SG&A $13,327 $12,026 $9,908
Asia-Pacific cash SG&A 3,435 2,752 2,510
---------- ------------ ----------
Cash SG&A $16,762 $14,778 $12,418
========== ============ ==========
(8) We define EBITDA as income (loss) from operations less
depreciation, amortization, accretion, stock-based compensation
expense and restructuring charges as presented below:
Income (loss) from operations $(2,804) $(31,006) $(3,497)
Depreciation, amortization and
accretion expense 17,881 17,034 15,390
Stock-based compensation expense 7,758 1,986 2,444
Restructuring charges - 33,814 -
---------- ------------ ----------
EBITDA $22,835 $21,828 $14,337
========== ============ ==========
The geographic split of our EBITDA is presented below:
U.S. income (loss) from
operations $(2,247) $(31,504) $(2,614)
U.S. depreciation, amortization
and accretion expense 16,866 16,187 14,217
U.S. stock-based compensation
expense 6,943 1,986 2,444
U.S. restructuring charges - 33,814 -
---------- ------------ ----------
U.S. EBITDA 21,562 20,483 14,047
---------- ------------ ----------
Asia-Pacific income (loss) from
operations (557) 498 (883)
Asia-Pacific depreciation,
amortization and accretion
expense 1,015 847 1,173
Asia-Pacific stock-based
compensation expense 815 - -
Asia-Pacific restructuring
charges - - -
---------- ------------ ----------
Asia-Pacific EBITDA 1,273 1,345 290
---------- ------------ ----------
EBITDA $22,835 $21,828 $14,337
========== ============ ==========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. EBITDA on a
same IBX versus new IBX basis is presented below:
Same IBX centers-income (loss)
from operations $(368) $(29,882) $(1,955)
Same IBX centers-depreciation,
amortization and accretion
expense 16,098 14,788 14,642
Same IBX centers-stock-based
compensation expense 7,758 1,986 2,444
Same IBX centers-restructuring
charges - 33,814 -
---------- ------------ ----------
Same IBX center EBITDA 23,488 20,706 15,131
---------- ------------ ----------
New IBX centers-income (loss)
from operations (2,436) (1,124) (1,542)
New IBX centers-depreciation,
amortization and accretion
expense 1,783 2,246 748
New IBX centers-stock-based
compensation expense - - -
New IBX centers-restructuring
charges - - -
---------- ------------ ----------
New IBX center EBITDA (653) 1,122 (794)
---------- ------------ ----------
EBITDA $22,835 $21,828 $14,337
========== ============ ==========
(9) We define cash gross margins as cash gross profit divided by
revenues.
Our cash gross margins by geographic region is presented below:
U.S. cash gross margins 62% 61% 57%
========== ============ ==========
Asia-Pacific cash gross margins 52% 49% 42%
========== ============ ==========
Same IBX centers are IBX centers which have been available for
customer installs for at least four full quarters. Our cash
gross margins for same IBX centers is presented below:
Same IBX cash gross margins 64% 62% 56%
========== ============ ==========
(10) We define EBITDA flow-through rate as incremental adjusted EBITDA
growth divided by incremental revenue growth as follows:
EBITDA - current period $22,835 $21,828 $14,337
Less EBITDA - prior period (21,828) (17,919) (12,363)
---------- ------------ ----------
EBITDA growth $1,007 $3,909 $1,974
========== ============ ==========
Revenues - current period $64,869 $61,798 $48,684
Less revenues - prior period (61,798) (58,096) (44,989)
---------- ------------ ----------
Revenue growth $3,071 $3,702 $3,695
========== ============ ==========
EBITDA flow-through rate 33% 106% 53%
========== ============ ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets March 31, December 31,
2006 2005
------------ ------------
Cash, cash equivalents and investments $162,223 $188,855
Accounts receivable, net 18,470 17,237
Property and equipment, net 449,236 438,790
Goodwill and other intangible assets, net 23,434 21,829
Debt issuance costs, net 2,867 3,075
Prepaid expenses 5,284 5,098
Deposits 4,193 3,548
Other assets 3,709 2,565
------------ ------------
Total assets $669,416 $680,997
============ ============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $21,185 $22,557
Accrued property and equipment 18,295 15,783
Accrued restructuring charges 47,718 49,831
Borrowings under credit line - 30,000
Mortgage payable 59,795 60,000
Capital lease obligations 34,332 34,530
Other financing obligations 61,509 61,675
Convertible subordinated debentures 86,250 86,250
Deferred installation revenue 7,137 7,658
Customer deposits 923 1,188
Deferred rent 21,119 18,792
Asset retirement obligations 3,773 3,649
Other liabilities 480 411
------------ ------------
Total liabilities 362,516 392,324
------------ ------------
Common stock 29 27
Additional paid-in capital 857,040 839,497
Deferred stock-based compensation - (4,930)
Accumulated other comprehensive income 1,948 1,126
Accumulated deficit (552,117) (547,047)
------------ ------------
Total stockholders' equity 306,900 288,673
------------ ------------
Total liabilities and stockholders'
equity $669,416 $680,997
============ ============
--------------------------------------------------------- ------------
Ending headcount by geographic region is as follows:
U.S. headcount 403 372
Asia-pacific headcount 167 165
------------ ------------
Total headcount 570 537
============ ============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
(in thousands)
(unaudited)
Three Months Ended
-------------------------------
March 31, December 31, March 31,
2006 2005 2005
--------- ----------- ---------
Cash flows from operating activities:
Net loss $(5,070) $(32,604) $(5,794)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation, amortization and
accretion 17,881 17,034 15,390
Stock-based compensation 7,758 1,986 2,444
Non-cash interest expense 208 224 905
Restructuring charges - 33,814 -
Other reconciling items (727) (507) 508
Changes in operating assets and
liabilities:
Accounts receivable (1,251) (1,031) (2,264)
Accounts payable and accrued
expenses (993) 153 (450)
Accrued restructuring charges (2,957) (1,618) (482)
Other assets and liabilities (2,058) 1,108 5,136
--------- ----------- ---------
Net cash provided by operating
activities 12,791 18,559 15,393
--------- ----------- ---------
Cash flows from investing activities:
Purchase of Ashburn campus property - (53,759) -
Purchase of Los Angeles IBX property - (21) -
Purchases of other property and
equipment (26,613) (22,920) (5,523)
Accrued property and equipment 2,512 10,626 (643)
Other investing activities 6 125 -
--------- ----------- ---------
Net cash used in investing
activities (24,095) (65,949) (6,166)
--------- ----------- ---------
Cash flows from financing activities:
Proceeds from warrants, stock
options and employee stock purchase
plans 14,714 1,772 4,347
Proceeds from borrowing under credit
line - 30,000 -
Proceeds from Los Angeles IBX
financing - 38,142 -
Proceeds from mortgage payable - 60,000 -
Repayment of borrowings under credit
line (30,000) - -
Repayment of capital lease
obligations (197) (186) (160)
Repayment of other financing
obligations (167) (1,124) (3,062)
Repayment of mortgage payable (205) - -
Other financing activities 370 (655) -
--------- ----------- ---------
Net cash provided by (used in)
financing activities (15,485) 127,949 1,125
--------- ----------- ---------
Effect of foreign currency exchange
rates on cash and cash equivalents 157 6 (308)
--------- ----------- ---------
Net increase (decrease) in cash, cash
equivalents and investments (26,632) 80,565 10,044
Cash, cash equivalents and investments
at beginning of period 188,855 108,290 108,092
--------- ----------- ---------
Cash, cash equivalents and investments
at end of period $162,223 $188,855 $118,136
========= =========== =========
Free cash flow (2) $(11,304) $(47,390) $9,227
========= =========== =========
Adjusted free cash flow (3) $(11,304) $6,390 $9,227
========= =========== =========
---------------------------------------
(1) The cash flow statements presented herein combine our short-term
and long-term investments with our cash and cash equivalents in an
effort to present our total unrestricted cash and equivalent
balances. In our quarterly filings with the SEC on Forms 10-Q and
10-K, the purchases, sales and maturities of our short-term and
long-term investments will be presented as activities within the
investing activities portion of the cash flow statements.
(2) We define free cash flow as net cash provided by operating
activities plus net cash used in investing activities (excluding
the purchases, sales and maturities of short-term and long-term
investments) as presented below:
Net cash provided by operating
activities as presented above $12,791 $18,559 $15,393
Net cash used in investing
activities as presented above (24,095) (65,949) (6,166)
--------- ----------- ---------
Free cash flow $(11,304) $(47,390) $9,227
========= =========== =========
(3) We define adjusted free cash flow as free cash flow (as defined
above) excluding any purchases or sales of real estate as
presented below:
Free cash flow (as defined above) $(11,304) $(47,390) $9,227
Less purchase of Ashburn campus
property - 53,759 -
Less purchase of Los Angeles IBX
property - 21 -
--------- ----------- ---------
Adjusted free cash flow $(11,304) $6,390 $9,227
========= =========== =========
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