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- Reported revenues of $466.3 million, a 3% increase over the previous quarter and an 18% increase over the same quarter last year
- Increased full year 2012 revenue guidance to greater than $1,920.0 million and increased 2012 adjusted EBITDA guidance to greater than $880.0 million
- Q2 Financials 2012 (PDF)
Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, today reported quarterly results for the quarter ended June 30, 2012. 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 $466.3 million for the second quarter, a 3% increase over the previous quarter and an 18% increase over the same quarter last year. Recurring revenues, consisting primarily of colocation, interconnection and managed services were $442.6 million for the second quarter, a 3% increase over the previous quarter and an 18% increase over the same quarter last year. Non-recurring revenues were $23.7 million in the quarter.
“Equinix delivered another strong quarter of financial results, which positions us well to meet our 2012 objectives,” said Steve Smith, president and CEO of Equinix. “Our ability to optimize data center capacity and operate efficiently as we expand our global footprint to meet customer demand, reinforces our leadership position and supports our long-term growth opportunity.”
Cost of revenues were $233.2 million for the second quarter, a 4% increase over the previous quarter and an 8% increase over the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $87.0 million, which we refer to as cash cost of revenues, were $146.2 million for the second quarter, a 4% increase from the previous quarter and a 6% increase over the same quarter last year. Gross margins for the quarter were 50%, unchanged from the previous quarter and up from 45% 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 up from 65% for the same quarter last year.
Selling, general and administrative expenses were $128.5 million for the second quarter, a 3% increase over the previous quarter and a 25% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $30.5 million, which we refer to as cash selling, general and administrative expenses, were $98.0 million for the second quarter, a 2% increase over the previous quarter and a 29% increase over the same quarter last year.
Interest expense was $46.8 million for the second quarter, an 11% decrease from the previous quarter, primarily attributed to the settlement of the $250.0 million 2.50% convertible subordinated notes in April 2012, and a 24% increase over the same quarter last year, primarily attributed to the $750.0 million 7.00% senior notes offering in July 2011. The Company recorded income tax expense of $17.4 million for the second quarter and income tax expense of $8.1 million in the same quarter last year.
Net income attributable to Equinix for the second quarter was $36.4 million. This represents a basic net income per share attributable to Equinix of $0.76 and a diluted net income per share attributable to Equinix of $0.73 based on a weighted average share count of 48.0 million and 52.4 million, respectively, for the second quarter of 2012.
Income from operations was $102.7 million for the second quarter, a 2% increase from the previous quarter and a 37% increase over the same quarter last year. Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges and acquisition costs, for the second quarter was $222.1 million, a 3% increase over the previous quarter and a 22% increase over the same quarter last year.
Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the second quarter, were $196.5 million, of which $159.0 million was attributed to expansion capital expenditures and $37.5 million was attributed to ongoing capital expenditures.
The Company generated cash from operating activities of $194.8 million for the second quarter as compared to $126.0 million in the previous quarter and $140.3 million for the same quarter last year. Cash provided by investing activities was $93.9 million in the second quarter as compared to cash provided by investing activities of $269.4 million in the previous quarter and cash used in investing activities of $209.7 million for the same quarter last year. Cash used in financing activities was $264.7 million for the second quarter, primarily attributed to the settlement of the $250.0 million 2.50% convertible subordinated notes in April 2012.
As of June 30, 2012, the Company’s cash, cash equivalents and investments were $823.0 million, as compared to $1,083.3 million as of March 31, 2012.
In July 2012, the Company completed the acquisitions of ancotel GmbH, a data center provider headquartered in Frankfurt, Germany, for cash consideration of approximately $85.7 million and Asia Tone Limited, a data center provider headquartered in Hong Kong, for cash consideration of approximately $230.5 million. In July 2012, the Company drew down and used the proceeds from its $200.0 million senior secured term loan facility, which was completed in June 2012, to prepay and terminate outstanding term loan facilities of the Company’s Asia-Pacific subsidiaries.
Business Outlook
For the third quarter of 2012, the Company expects revenues to be in the range of $492.0 to $498.0 million, including $13.0 to $15.0 million of revenue attributed to the Asia Tone and ancotel acquisitions which closed in July. The third quarter revenue includes approximately $4.0 million of negative foreign currency headwinds when compared to the exchange rates used in the second quarter. Cash gross margins are expected to range between 67% and 68%. Cash selling, general and administrative expenses are expected to range between $110.0 and $115.0 million. Adjusted EBITDA is expected to range between $220.0 and $222.0 million, including $4.0 to $6.0 million of adjusted EBITDA attributed to the Asia Tone and ancotel acquisitions, and also includes a $7.0 million increase in utilities expense due to higher seasonal rates and $2.0 million of negative currency headwinds. Capital expenditures are expected to be approximately $240.0 to $260.0 million, comprised of approximately $30.0 million of ongoing capital expenditures and $210.0 to $230.0 million of expansion capital expenditures.
For the full year of 2012, total revenues are expected to be greater than $1,920.0 million, including approximately $30.0 million of revenue attributed to the Asia Tone and ancotel acquisitions, and also includes approximately $18.0 million of negative foreign currency headwinds compared to our previous annual guidance rates. Total year cash gross margins are expected to approximate 68%. Cash selling, general and administrative expenses are expected to range between $420.0 and $430.0 million. Adjusted EBITDA for the year is expected to be greater than $880.0 million, including approximately $10.0 million of adjusted EBITDA attributed to the Asia Tone and ancotel acquisitions, and also includes $8.0 million of negative currency headwinds. Capital expenditures for 2012 are expected to be in the range of $740.0 to $800.0 million, comprised of approximately $135.0 million of ongoing capital expenditures and $605.0 to $665.0 million for expansion capital expenditures.
Company Metrics and Q2 Results Presentation
The Company will discuss its results and guidance on its quarterly conference call on Wednesday, July 25, 2012, at 5:30 p.m. ET (2:30 p.m. PT). A simultaneous live Webcast of the call will be available on the Equinix investors website located 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 presentation to accompany the call as well as the Company’s Non-Financial Metrics tracking sheet, will also be available on the website.
A replay of the call will be available beginning on Wednesday, July 25, 2012, at 7:30 p.m. (ET) through August 25, 2012, by dialing 203-369-3024 (domestic and international) and reference the passcode (2012). In addition, the webcast will be available on the Investor Relations section of the Company’s website over the same time period. No password is required for the replay or the webcast.
