- Reported revenues of $519.5 million, a 3% increase over the previous quarter and a 17% increase over the same quarter last year
- Reiterated 2013 annual guidance of revenues to be greater than $2,200.0 million, adjusted EBITDA to be greater than $1,010.0 million and total capital expenditures to be in the range of $550.0 to $650.0 million
- Q1 Financials 2013 (PDF)
Equinix, Inc. (Nasdaq: EQIX),the global interconnection and data center company, yesterday reported quarterly results for the quarter ended March 31, 2013. The Company 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.
Revenues were $519.5 million for the first quarter, a 3% increase over the previous quarter and a 17% increase over the same quarter last year. Recurring revenues, consisting primarily of colocation, interconnection and managed services were $495.3 million for the first quarter, a 3% increase over the previous quarter and an 18% increase over the same quarter last year. Non-recurring revenues were $24.2 million in the quarter.
"Equinix delivered solid financial results in the first quarter, and we are well positioned for the remainder of 2013," said Steve Smith, president and CEO of Equinix. "We are executing with discipline and focus to capture the demand driven by strong secular trends in video, cloud, mobility and IP traffic. This quarter we saw record bookings in Cloud as service providers expand their services to meet the changing needs of enterprises who are deploying hybrid cloud architectures across Platform Equinix."
Cost of revenues were $259.3 million for the first quarter, a 4% increase over the previous quarter and a 19% increase over the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $96.5 million, which we refer to as cash cost of revenues, were $162.8 million for the first quarter, a 2% increase from the previous quarter and a 19% increase over the same quarter last year. Gross margins for the quarter were 50%, down from 51% for the previous quarter and 51% for the same quarter last year. Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 69%, unchanged from the previous quarter and the same quarter last year.
Selling, general and administrative expenses were $148.0 million for the first quarter, a 4% increase over the previous quarter and a 19% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $34.8 million, which we refer to as cash selling, general and administrative expenses, were $113.2 million for the first quarter, a 5% increase over the previous quarter and an 18% increase over the same quarter last year.
Interest expense was $60.3 million for the first quarter, a 19% increase from the previous quarter and a 14% increase over the same quarter last year, primarily attributed to the $1.5 billion senior notes offering in March 2013. The Company recorded income tax expense of $12.2 million for the first quarter and income tax expense of $13.9 million in the same quarter last year.
Income from continuing operations was $108.6 million for the first quarter, a 6% increase from the previous quarter and an 8% increase over the same quarter last year. Adjusted EBITDA, defined as income or loss from continuing operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges, impairment charges and acquisition costs, for the first quarter was $243.5 million, an increase of 2% over the previous quarter and a 16% increase over the same quarter last year.
Net income attributable to Equinix for the first quarter was $35.9 million. This represents a basic net income per share attributable to Equinix of $0.73 and a diluted net income per share attributable to Equinix of $0.71 based on a weighted average share count of 49.0 million and 53.5 million, respectively, for the first quarter of 2013.
Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the first quarter, were $75.7 million, of which $41.7 million was attributed to expansion capital expenditures and $34.0 million was attributed to ongoing capital expenditures.
The Company generated cash from operating activities of $84.2 million for the first quarter as compared to $209.1 million in the previous quarter and $126.0 million for the same quarter last year. Cash used in investing activities was $1,142.5 million in the first quarter, primarily attributed to $836.4 million of the proceeds from the issuance of the $1.5 billion senior notes that was placed into a restricted cash account for the redemption of the $750.0 million 8.125% senior notes, as compared to cash used in investing activities of $209.3 million in the previous quarter and cash provided by investing activities of $269.4 million for the same quarter last year. Cash provided by financing activities was $1,496.8 million for the first quarter, primarily attributed to the issuance of the $1.5 billion senior notes, as compared to cash provided by financing activities of $12.2 million in the previous quarter and cash used in financing activities of $44.0 million for the same quarter last year.
As of March 31, 2013, the Company's cash, cash equivalents and investments, excluding restricted cash, were $1,212.1 million as compared to $546.5 million as of December 31, 2012.
In April 2013, the Company redeemed the entire principal amount of the $750.0 million 8.125% senior notes pursuant to the optional redemption provisions of such notes. As a result, the Company will recognize a loss on debt extinguishment in the second quarter of 2013 of approximately $89.9 million, representing the redemption premium paid of $80.9 million and the write-off of unamortized debt issuance costs of $9.0 million related to the $750.0 million 8.125% senior notes.
Business Outlook
For the second quarter of 2013, the Company expects revenues to be in the range of $530.0 to $534.0 million. Cash gross margins are expected to range between 68% and 69%. Cash selling, general and administrative expenses are expected to range between $120.0 and $124.0 million. Adjusted EBITDA is expected to be between $240.0 and $244.0 million. Capital expenditures are expected to be approximately $170.0 to $180.0 million, comprised of approximately $45.0 million of ongoing capital expenditures and $125.0 to $135.0 million of expansion capital expenditures.
For the full year of 2013, total revenues are expected to be greater than $2,200.0 million, which absorbs approximately $21.0 million in negative currency movements, when compared to our prior foreign currency exchange rates. Total year cash gross margins are expected to range between 68% to 69%. Cash selling, general and administrative expenses are expected to range between $490.0 and $510.0 million. Adjusted EBITDA for the year is expected to be greater than $1,010.0 million, which absorbs approximately $9.0 million in negative currency movements, when compared to our prior foreign currency exchange rates. Capital expenditures for 2013 are expected to be in the range of $550.0 to $650.0 million, comprised of approximately $165.0 million of ongoing capital expenditures and $385.0 to $485.0 million for expansion capital expenditures.
The U.S. dollar exchange rates used for 2013 guidance have been updated to $1.28 to the Euro, $1.52 to the Pound, S$1.24 to the U.S. dollar and R$2.02 to the U.S. dollar. Updated global revenue breakdown by currency for the Euro, Pound, Singapore dollar and Brazilian Real is 14%, 8%, 6% and 4%, respectively.
Company Metrics and Q1 Results Presentation
The Company will discuss its results and guidance on its quarterly conference call on Wednesday, April 24, 2013, at 5:30 p.m. ET (2:30 p.m. PT). A presentation to accompany the call as well as the Company's Non-Financial Metrics tracking sheet will be available on the Company's website at www.equinix.com/investors. To hear the conference call live, please dial 210-234-8004 (domestic and international) and reference the passcode (EQIX). A simultaneous live Webcast of the call will also be available at www.equinix.com/investors. A replay of the call will be available beginning on Wednesday, April 24, 2013, at 7:30 p.m. (ET) through May 24, 2013, by dialing 203-369-0250 and referencing the passcode (2013). In addition, the webcast will be available on the Company's web site at www.equinix.com/investors. No password is required for the replay or the webcast.
