Equinix Reports Second 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), the leading provider of network-neutral data centers and Internet exchange See IXP and NAP. services, today reported quarterly results for the period ended June June: see month. 30, 2006. The independent review by the Audit Committee has been completed, and, as originally disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). on August 2, 2006, the Committee reached the conclusion that the accounting measurement dates of certain stock option grants issued in the past differ from their actual grant dates. Accordingly, Equinix recorded an additional non-cash stock-based compensation charge of $445,000 for the second quarter. The Audit Committee concluded that the Company did not engage in intentional in·ten·tion·al adj. 1. Done deliberately; intended: an intentional slight. See Synonyms at voluntary. 2. Having to do with intention. or fraudulent The description of a willful act commenced with the Specific Intent to deceive or cheat, in order to cause some financial detriment to another and to engender personal financial gain. misconduct MISCONDUCT. Unlawful behaviour by a person entrusted in any degree: with the administration of justice, by which the rights of the parties and the justice of the, case may have been affected. 2. in the granting of stock options. This one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge, the cumulative effect for the correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. of errors related to prior periods, was not material to any particular prior quarter, and thus there is no restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. to the Company's previously filed financial statements. Also, the Company has filed its Form 10-Q Form 10-Q See 10-Q. for the second quarter of 2006 today. As reported August 2, 2006, revenues were $68.5 million for the second quarter, a 6% increase over the previous quarter and a 31% 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 $65.1 million, a 5% increase over the previous quarter and a 32% increase over the same quarter last year. Non-recurring revenues were $3.4 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 (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 , 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 $45.6 million for the second quarter, including $963,000 of stock-based compensation, a 5% increase over the previous quarter and a 17% 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 $18.8 million, were $26.8 million for the second quarter, a 6% increase 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%, the same as the previous quarter and up from 56% the same quarter last year. Selling, general and administrative expenses were $26.2 million for the second quarter, including $7.9 million of stock-based compensation, an 8% increase over the previous quarter and a 62% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $8.5 million, were $17.7 million for the second quarter, a 5% increase over the previous quarter and a 35% increase over same quarter last year. Net loss for the second quarter, including stock-based compensation expense of $8.9 million, was $5.3 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 $0.19 based on a weighted average share count of 28.5 million. Excluding stock-based compensation, the Company was net income positive for the second quarter, with a non-GAAP net income of $3.6 million. This was a $939,000 improvement from the previous quarter's result of $2.7 million and a $4.6 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 second quarter was $24.0 million, up 5% over the previous quarter and up from $16.1 million the same quarter last year. "We continue to experience strong momentum across all areas of our business," said Peter Van Camp, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Equinix. "We are pleased the Audit Committee has completed the investigation and found no intentional misconduct in our prior stock option grant practices. We intend to continue to cooperate with the ongoing inquiries from the SEC and DOJ (Department Of Justice) The legal arm of the U.S. government that represents the public interest of the United States. It is headed by the Attorney General. ." Capital expenditures in the second quarter were $29.7 million, of which $8.9 million was attributed to ongoing capital expenditures and $20.8 million was attributed to expansion capital expenditures. In addition, the Company also purchased the previously announced 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. 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) expansion property in the second quarter for $9.8 million, which the Company paid for in full with cash in June 2006. The Company generated cash from operating activities of $16.1 million as compared to $12.8 million in the previous quarter. Cash used in investing activities was $35.8 million as compared to $24.1 million in the previous quarter. Adjusted free cash flow was a negative $9.9 million in the second 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 June 30, 2006, the Company's cash, cash equivalents and investments were $147.9 million, as compared to $162.2 million in the previous quarter. Business Outlook For the third quarter 2006, revenues are expected to be in the range of $72.0 to $73.0 million. Cash gross margins will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 60%. Cash selling, general and administrative expenses are expected to be approximately $18.0 million. EBITDA for the third quarter is expected to be approximately $25.0 million. Net loss is expected to be approximately $6.0 million, including the impact of approximately $8.0 million of stock-based compensation expense. Net interest expense will be approximately $2.5 million. The weighted average shares outstanding will be approximately 28.9 million. Capital expenditures are expected to be approximately $55.0 to $60.0 million, including $45.0 to $50.0 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 60% to 61% including approximately $4.0 million of net cash costs attributed to our expansion IBXs. Cash selling, general and administrative expenses are expected to be in the range of $68.0 to $70.0 million, including incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. professional fees attributed to the stock option investigation. EBITDA for the year is expected to be $100.0 to $104.0 million. Capital expenditures for 2006 are expected to be in a range of $180.0 to $185.0 million, comprised of approximately $30.0 million of ongoing capital expenditures and $150.0 to $155.0 million of expansion capital expenditures for the build out of the Chicago, 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 opened this year, as well as the greenfield Greenfield, town (1990 pop. 18,666), seat of Franklin co., NW Mass., at the confluence of the Deerfield and Green rivers, near their junction with the Connecticut; settled 1686, set off from Deerfield and inc. 1753. expansions in the 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., Chicago and New York metro For the region, see . Metro New York is a free daily newspaper in New York City started in 2004. Its main competition is AM New York, with which it practices many of the same distribution and marketing strategies. areas. 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 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 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; the results of any 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. review of past stock option grants and practices or any litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc such grants and practices; 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 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 changes encourage use of and emphasis on GAAP financial 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. 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 and six months ended June 30, 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 Six Months Ended
--------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
-------- --------- -------- --------- ---------
Recurring revenues $65,089 $ 61,752 $49,431 $126,841 $ 95,332
Non-recurring revenues 3,459 3,117 3,048 6,576 5,831
-------- --------- -------- --------- ---------
Revenues 68,548 64,869 52,479 133,417 101,163
Cost of revenues 45,563 43,345 38,811 88,908 75,684
-------- --------- -------- --------- ---------
Gross profit 22,985 21,524 13,668 44,509 25,479
-------- --------- -------- --------- ---------
Operating expenses:
Sales and marketing 8,480 7,198 5,145 15,678 9,964
General and
administrative 17,725 17,130 11,027 34,855 21,516
-------- --------- -------- --------- ---------
Total operating
expenses 26,205 24,328 16,172 50,533 31,480
-------- --------- -------- --------- ---------
Income (loss) from
operations (3,220) (2,804) (2,504) (6,024) (6,001)
-------- --------- -------- --------- ---------
Interest and other
income (expense):
Interest income 1,730 1,611 902 3,341 1,569
Interest expense
and other (3,565) (3,868) (1,945) (7,433) (4,404)
-------- --------- -------- --------- ---------
Total interest
and other, net (1,835) (2,257) (1,043) (4,092) (2,835)
-------- --------- -------- --------- ---------
Net loss before income
taxes and cumulative
effect of a change in
accounting principle (5,055) (5,061) (3,547) (10,116) (8,836)
Income taxes (215) (385) 116 (600) (389)
Net loss before
cumulative effect of -------- --------- -------- --------- ---------
a change in
accounting principle (5,270) (5,446) (3,431) (10,716) (9,225)
Cumulative effect
of a change in
accounting
principle - 376 - 376 -
-------- --------- -------- --------- ---------
Net loss $(5,270) $ (5,070) $(3,431) $(10,340) $ (9,225)
======== ========= ======== ========= =========
Net loss per share:
Basic and diluted net
loss per share before
cumulative effect of
a change in
accounting principle $ (0.19) $ (0.20) $ (0.14) $ (0.38) $ (0.40)
Cumulative effect of a
change in accounting
principle - 0.02 - 0.01 -
-------- --------- -------- --------- ---------
Basic and diluted net
loss per share $ (0.19) $ (0.18) $ (0.14) $ (0.37) $ (0.40)
======== ========= ======== ========= =========
Shares used in
computing basic and
diluted net loss per
share 28,468 27,848 23,727 28,160 22,964
======== ========= ======== ========= =========
----------------------------------------------------------------------
Non-GAAP net income
(loss) (1) $ 3,627 $ 2,688 $ (942) $ 6,315 $ (4,292)
======== ========= ======== ========= =========
(1)Non-GAAP net income (loss) excludes stock-based
compensation and restructuring charges as follows:
Net loss $(5,270) $ (5,070) $(3,431) $(10,340) $ (9,225)
Stock-based
compensation 8,897 7,758 2,489 16,655 4,933
Restructuring
charges - - - - -
-------- --------- -------- --------- ---------
Non-GAAP net
income (loss) $ 3,627 $ 2,688 $ (942) $ 6,315 $ (4,292)
======== ========= ======== ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- NON-GAAP
PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
----------------------------- --------------------
June 30, March 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
--------- --------- --------- ---------- ---------
Recurring revenues $ 65,089 $ 61,752 $ 49,431 $ 126,841 $ 95,332
Non-recurring
revenues 3,459 3,117 3,048 6,576 5,831
--------- --------- --------- ---------- ---------
Revenues (1) 68,548 64,869 52,479 133,417 101,163
Cash cost of
revenues (2) 26,845 25,272 23,317 52,117 45,246
--------- --------- --------- ---------- ---------
Cash gross
profit (3) 41,703 39,597 29,162 81,300 55,917
--------- --------- --------- ---------- ---------
Cash operating
expenses (4):
Cash sales and
marketing
expenses (5) 6,333 5,291 4,676 11,624 9,033
Cash general and
administrative
expenses (6) 11,332 11,471 8,431 22,803 16,492
--------- --------- --------- ---------- ---------
Total cash
operating
expenses (7) 17,665 16,762 13,107 34,427 25,525
--------- --------- --------- ---------- ---------
EBITDA (8) $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
Cash gross margins
(9) 61% 61% 56% 61% 55%
========= ========= ========= ========== =========
EBITDA flow-through
rate (10) 33% 33% 45% 53% 58%
========= ========= ========= ========== =========
-------------------
(1) The geographic split of our revenues is presented below:
U.S. revenues $ 58,900 $ 55,840 $ 45,384 $ 114,741 $ 87,400
Asia-Pacific
revenues 9,648 9,029 7,095 18,676 13,763
--------- --------- --------- ---------- ---------
Revenues $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
========= ========= ========= ========== =========
Revenues on a services basis is presented below:
Colocation $ 47,988 $ 45,569 $ 36,105 $ 93,557 $ 69,341
Interconnection 12,644 11,804 9,845 24,448 19,169
Managed
infrastructure 4,046 3,933 3,481 7,979 6,822
Rental 411 446 - 857 -
--------- --------- --------- ---------- ---------
Recurring
revenues 65,089 61,752 49,431 126,841 95,332
Non-recurring
revenues 3,459 3,117 3,048 6,576 5,831
--------- --------- --------- ---------- ---------
Revenues $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
========= ========= ========= ========== =========
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 $ 68,190 $ 62,530 $ 51,282 $ 130,720 $ 99,739
New IBX centers 358 2,339 1,197 2,697 1,424
--------- --------- --------- ---------- ---------
Revenues $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
========= ========= ========= ========== =========
(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 $ 45,563 $ 43,345 $ 38,811 $ 88,908 $ 75,684
Depreciation,
amortization
and accretion
expense (17,755) (17,315) (15,494) (35,070) (30,438)
Stock-based
compensation
expense (963) (758) - (1,721) -
--------- --------- --------- ---------- ---------
Cash cost
of
revenues $ 26,845 $ 25,272 $ 23,317 $ 52,117 $ 45,246
========= ========= ========= ========== =========
The geographic split of our cash cost of revenues is presented
below:
U.S. cash cost
of revenues $ 22,312 $ 20,951 $ 19,339 $ 43,263 $ 37,400
Asia-Pacific
cash cost of
revenues 4,533 4,321 3,978 8,854 7,846
--------- --------- --------- ---------- ---------
Cash cost
of
revenues $ 26,845 $ 25,272 $ 23,317 $ 52,117 $ 45,246
========= ========= ========= ========== =========
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 $ 24,849 $ 22,476 $ 21,390 $ 47,325 $ 42,481
Same IBX
centers-
depreciation,
amortization
and accretion
expense 16,433 15,532 14,183 31,965 28,379
Same IBX
centers-stock-
based
compensation
expense 963 758 - 1,721 -
--------- --------- --------- ---------- ---------
Same IBX
centers
cost of
revenues 42,245 38,766 35,573 81,011 70,860
--------- --------- --------- ---------- ---------
New IBX
centers-cash
cost of
revenues 1,996 2,796 1,927 4,792 2,765
New IBX
centers-
depreciation,
amortization
and accretion
expense 1,322 1,783 1,311 3,105 2,059
New IBX
centers-stock-
based
compensation
expense - - - - -
--------- --------- --------- ---------- ---------
New IBX
centers cost
of revenues 3,318 4,579 3,238 7,897 4,824
--------- --------- --------- ---------- ---------
Cost of
revenues $ 45,563 $ 43,345 $ 38,811 $ 88,908 $ 75,684
========= ========= ========= ========== =========
(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 $ 8,480 $ 7,198 $ 5,145 $ 15,678 $ 9,964
Depreciation
and
amortization
expense (15) (15) (15) (30) (30)
Stock-based
compensation
expense (2,132) (1,892) (454) (4,024) (901)
--------- --------- --------- ---------- ---------
Cash sales
and
marketing
expenses $ 6,333 $ 5,291 $ 4,676 $ 11,624 $ 9,033
========= ========= ========= ========== =========
(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 $ 17,725 $ 17,130 $ 11,027 $ 34,855 $ 21,516
Depreciation
and
amortization
expense (591) (551) (561) (1,142) (992)
Stock-based
compensation
expense (5,802) (5,108) (2,035) (10,910) (4,032)
--------- --------- --------- ---------- ---------
Cash
general
and
adminis-
trative
expenses $ 11,332 $ 11,471 $ 8,431 $ 22,803 $ 16,492
========= ========= ========= ========== =========
(7) Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and
marketing
expenses $ 6,333 $ 5,291 $ 4,676 $ 11,624 $ 9,033
Cash general
and adminis-
trative
expenses 11,332 11,471 8,431 22,803 16,492
--------- --------- --------- ---------- ---------
Cash SG&A $ 17,665 $ 16,762 $ 13,107 $ 34,427 $ 25,525
========= ========= ========= ========== =========
The geographic split of our cash operating expenses, or cash
SG&A, is presented below:
U.S. cash SG&A $ 14,599 $ 13,327 $ 10,486 $ 27,926 $ 20,394
Asia-Pacific
cash SG&A 3,066 3,435 2,621 6,501 5,131
--------- --------- --------- ---------- ---------
Cash SG&A $ 17,665 $ 16,762 $ 13,107 $ 34,427 $ 25,525
========= ========= ========= ========== =========
(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 $ (3,220) $ (2,804) $ (2,504) $ (6,024) $ (6,001)
Depreciation,
amortization
and accretion
expense 18,361 17,881 16,070 36,242 31,460
Stock-based
compensation
expense 8,897 7,758 2,489 16,655 4,933
Restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
EBITDA $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
The geographic split of our EBITDA is presented below:
U.S. income
(loss) from
operations $ (3,404) $ (2,247) $ (1,871) $ (5,651) $ (4,485)
U.S.
depreciation,
amortization
and accretion
expense 17,419 16,866 14,941 34,285 29,158
U.S. stock-
based
compensation
expense 7,975 6,943 2,489 14,918 4,933
U.S.
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
U.S. EBITDA 21,990 21,562 15,559 43,552 29,606
--------- --------- --------- ---------- ---------
Asia-Pacific
income (loss)
from
operations 184 (557) (633) (373) (1,516)
Asia-Pacific
depreciation,
amortization
and accretion
expense 942 1,015 1,129 1,957 2,302
Asia-Pacific
stock-based
compensation
expense 922 815 - 1,737 -
Asia-Pacific
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
Asia-
Pacific
EBITDA 2,048 1,273 496 3,321 786
--------- --------- --------- ---------- ---------
EBITDA $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
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 $ 76 $ (368) $ (232) $ (292) $ (2,187)
Same IBX
centers-
depreciation,
amortization
and accretion
expense 17,039 16,098 14,759 33,137 29,401
Same IBX
centers-stock-
based
compensation
expense 8,897 7,758 2,489 16,655 4,933
Same IBX
centers-
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
Same IBX
center
EBITDA 26,012 23,488 17,016 49,500 32,147
--------- --------- --------- ---------- ---------
New IBX
centers-income
(loss) from
operations (3,296) (2,436) (2,272) (5,732) (3,814)
New IBX
centers-
depreciation,
amortization
and accretion
expense 1,322 1,783 1,311 3,105 2,059
New IBX
centers-stock-
based
compensation
expense - - - - -
New IBX
centers-
restructuring
charges - - - - -
--------- --------- --------- ---------- ---------
New IBX
center
EBITDA (1,974) (653) (961) (2,627) (1,755)
--------- --------- --------- ---------- ---------
EBITDA $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
========= ========= ========= ========== =========
(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% 62% 57% 62% 57%
========= ========= ========= ========== =========
Asia-Pacific
cash gross
margins 53% 52% 44% 53% 43%
========= ========= ========= ========== =========
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% 64% 58% 64% 57%
========= ========= ========= ========== =========
(10) We define EBITDA flow-through rate as incremental EBITDA growth
divided by incremental revenue growth as follows:
EBITDA --
current period $ 24,038 $ 22,835 $ 16,055 $ 46,873 $ 30,392
Less EBITDA --
prior period (22,835) (21,828) (14,337) (39,747) (22,429)
--------- --------- --------- ---------- ---------
EBITDA
growth $ 1,203 $ 1,007 $ 1,718 $ 7,126 $ 7,963
========= ========= ========= ========== =========
Revenues --
current period $ 68,548 $ 64,869 $ 52,479 $ 133,417 $101,163
Less revenues
-- prior
period (64,869) (61,798) (48,684) (119,894) (87,428)
--------- --------- --------- ---------- ---------
Revenue
growth $ 3,679 $ 3,071 $ 3,795 $ 13,523 $ 13,735
========= ========= ========= ========== =========
EBITDA flow-
through rate 33% 33% 45% 53% 58%
========= ========= ========= ========== =========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets June 30, December 31,
2006 2005
------------ ------------
Cash, cash equivalents and investments $ 147,939 $ 188,855
Accounts receivable, net 23,347 17,237
Property and equipment, net 471,765 438,790
Goodwill and other intangible assets, net 23,485 21,829
Debt issuance costs, net 2,659 3,075
Prepaid expenses 4,900 5,098
Deposits 6,641 3,548
Other assets 2,437 2,565
------------ ------------
Total assets $ 683,173 $ 680,997
============ ============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 23,582 $ 22,557
Accrued property and equipment 21,938 15,783
Accrued restructuring charges 45,350 49,831
Borrowings under credit line - 30,000
Capital lease obligations 34,130 34,530
Other financing obligations 61,336 61,675
Mortgage payable 59,484 60,000
Convertible subordinated debentures 86,250 86,250
Deferred installation revenue 7,573 7,658
Customer deposits 785 1,188
Deferred rent 21,152 18,792
Asset retirement obligations 3,904 3,649
Other liabilities 562 411
------------ ------------
Total liabilities 366,046 392,324
------------ ------------
Common stock 29 27
Additional paid-in capital 871,999 839,497
Deferred stock-based compensation - (4,930)
Accumulated other comprehensive income 2,486 1,126
Accumulated deficit (557,387) (547,047)
------------ ------------
Total stockholders' equity 317,127 288,673
------------ ------------
Total liabilities and stockholders'
equity $ 683,173 $ 680,997
============ ============
--------------------------------------------------------- ------------
Ending headcount by geographic region is as
follows:
U.S. headcount 402 372
Asia-pacific headcount 169 165
------------ ------------
Total headcount 571 537
============ ============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
----------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
--------- --------- --------- --------- ---------
Cash flows from
operating
activities:
Net loss $ (5,270) $ (5,070) $ (3,431) $(10,340) $ (9,225)
Adjustments to
reconcile net
loss to net cash
provided by
operating
activities:
Depreciation,
amortization
and accretion 18,361 17,881 16,070 36,242 31,460
Stock-based
compensation 8,897 7,758 2,489 16,655 4,933
Non-cash
interest
expense 208 208 268 416 1,173
Restructuring
charges - - - - -
Other
reconciling
items (64) (727) 6 (791) (49)
Changes in
operating
assets and
liabilities:
Accounts
receivable (5,011) (1,251) (1,484) (6,262) (3,748)
Accounts
payable and
accrued
expenses 2,597 (993) 3,402 1,604 2,952
Accrued
restructuring
charges (3,168) (2,957) (486) (6,125) (968)
Other assets
and
liabilities (443) (2,058) 1,315 (2,501) 7,014
--------- --------- --------- --------- ---------
Net cash
provided
by
operating
activities 16,107 12,791 18,149 28,898 33,542
--------- --------- --------- --------- ---------
Cash flows from
investing
activities:
Purchase of
Ashburn campus
property - - - - -
Purchase of Los
Angeles IBX
property - - - - -
Purchase of
Chicago IBX
property (9,766) - - (9,766) -
Purchases of
other property
and equipment (29,671) (26,613) (9,890) (56,284) (15,413)
Accrued property
and equipment 3,643 2,512 3,155 6,155 2,512
Other investing
activities - 6 - 6 -
--------- --------- --------- --------- ---------
Net cash
used in
investing
activities (35,794) (24,095) (6,735) (59,889) (12,901)
--------- --------- --------- --------- ---------
Cash flows from
financing
activities:
Proceeds from
warrants, stock
options
and employee
stock purchase
plans 5,862 14,714 3,285 20,576 7,632
Repayment of
borrowings under
credit line - (30,000) - (30,000) -
Repayment of
capital lease
obligations (201) (197) (163) (398) (322)
Repayment of
other financing
obligations (174) (167) (627) (341) (3,690)
Repayment of
mortgage payable (311) (205) - (516) -
Other financing
activities 200 370 - 570 -
--------- --------- --------- --------- ---------
Net cash
provided
by (used
in)
financing
activities 5,376 (15,485) 2,495 (10,109) 3,620
--------- --------- --------- --------- ---------
Effect of foreign
currency exchange
rates on cash and
cash equivalents 27 157 (16) 184 (324)
--------- --------- --------- --------- ---------
Net increase
(decrease) in cash,
cash equivalents
and investments (14,284) (26,632) 13,893 (40,916) 23,937
Cash, cash
equivalents and
investments at
beginning of period 162,223 188,855 118,136 188,855 108,092
--------- --------- --------- --------- ---------
Cash, cash
equivalents and
investments at end
of period $147,939 $162,223 $132,029 $147,939 $132,029
========= ========= ========= ========= =========
Free cash flow (2) $(19,687) $(11,304) $ 11,414 $(30,991) $ 20,641
========= ========= ========= ========= =========
Adjusted free cash
flow (3) $ (9,921) $(11,304) $ 11,414 $(21,225) $ 20,641
========= ========= ========= ========= =========
--------------------
(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 $ 16,107 $ 12,791 $ 18,149 $ 28,898 $ 33,542
Net cash used in
investing
activities as
presented above (35,794) (24,095) (6,735) (59,889) (12,901)
--------- --------- --------- --------- ---------
Free cash flow $(19,687) $(11,304) $ 11,414 $(30,991) $ 20,641
========= ========= ========= ========= =========
(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) $(19,687) $(11,304) $ 11,414 $(30,991) $ 20,641
Less purchase of
Chicago IBX
property 9,766 - - 9,766 -
--------- --------- --------- --------- ---------
Adjusted free
cash flow $ (9,921) $(11,304) $ 11,414 $(21,225) $ 20,641
========= ========= ========= ========= =========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion