Equinix, Inc. · NASDAQ:EQIX

Equinix — Q4 2019 Earnings Presentation

48 slides from Equinix's earnings presentation, Feb 12, 2020

  1. Slide 1: Q4 2019 Earnings Conference Call

    Q4 2019 Earnings Conference Call NASDAQ: EQIX Presented on February 12, 2020 Confidential – © 2020 Equinix Inc. Equinix.com 1

  2. Slide 2: Public Disclosure Statement

    Public Disclosure Statement Forward-Looking Statements Except for historical information, this presentation contains forward-looking statements, which include words such as “believe,” “anticipate,” and “expect.” These forward-looking statements involve risks and uncertainties that may cause Equinix’

  3. Slide 3: 2019 Financial Highlights

    2019 Financial Highlights Recurring Revenues Non-recurring Revenues Revenues Revenues Q4 19 FY19 ($M) $5,562 Growth QoQ YoY YoY $5,072 $4,368 As-reported 1% 8% 10% $3,612 $2,726 Normalized and (1) 2% 8% 9% $4,777 $5,238 Constant Currency $4,120 (1) $3,417 $2,569 Normalized MRR 2% 8% 9% FY15 FY16 FY1

  4. Slide 4: Q4 2019 Consolidated Results

    Q4 2019 Consolidated Results $M except for AFFO per Share and Q4 19 FY19 Non-Financial Metrics Guidance Actual QoQ YoY Guidance Actual YoY Revenues(1) $1,409 - 1,419 $1,417 1% 8% $5,554 - 5,564 $5,562 10% Cash Gross Profit $940 1% 9% $3,711 10% Cash Gross Margin % 65 -66% 66.3% 66 - 67% 66.7% Cash S

  5. Slide 5: Americas Performance

    Americas Performance Revenues Q4 19 ($M) $644 $644 $645 $654 Revenues Growth $638 QoQ YoY As-reported 1% 2% Normalized and (1) 2% 3% Constant Currency (1) Normalized MRR 1% 4% Adjusted EBITDA Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Growth QoQ YoY Adjusted EBITDA Margin Adjusted EBITDA Adjusted EBITDA As

  6. Slide 6: EMEA Performance

    EMEA Performance Revenues $458 $464 $450 Revenues Q4 19 ($M) $435 $403 Growth QoQ YoY As-reported 1% 15% Normalized and (1) 3% 13% Constant Currency (1) Normalized MRR 4% 12% Adjusted EBITDA Q4 19 Growth QoQ YoY Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 As-reported 3% 14% Adjusted EBITDA Adjusted EBITDA Adjuste

  7. Slide 7: Asia-Pacific Performance

    Asia-Pacific Performance Revenues Revenues Q4 19 $291 $293 $300 ($M) $284 $269 Growth QoQ YoY As-reported 2% 11% Normalized and (1) 2% 11% Constant Currency (1) Normalized MRR 2% 13% Adjusted EBITDA Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Growth QoQ YoY Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Ma

  8. Slide 8: Capital Structure

    Capital Structure Debt Equity • Q4 19 issued $2.8B of Senior Notes at a blended • Raised net proceeds of $448M in borrowing rate of 2.93% consisting of: 2019 under our $750M ATM (1) • 2.625% $1.0B Senior Notes due in 2024 Net Leverage Ratio program at an average net price of 3.7x $496 per share • 2.

  9. Slide 9: Capital Expenditures

    Capital Expenditures Recurring Capital Expenditures 5.7% 5.4% ($M) • Recurring capital expenditures typically 3.4% $81 trend between 3% and 5% of revenues, $70 9% 12% annually 13% 2.7% 18% $47 • Maintenance capital expenditures can vary 1.5% 13% $37 14% by quarter based on maintenance schedules 18%

  10. Slide 10: Stabilized IBX Growth

    (1) (2) Stabilized IBX Growth Stabilized, Expansion & New IBXs Stabilized IBX Profitability ($M) Last Quarter $7,511 $3,349 $2,271 $84 Reported # of IBXs Q4 19 Revenues ($M) $9,000 $8,000 $7,703 ~30% annual Cash Gross Profit on Gross PP&E $7,000 investment (5) Expansion: $6,000 Stabilized: 17% Stabi

  11. Slide 11: 2020 Financial Guidance

    (1) 2020 Financial Guidance ($M except AFFO per Share) FY 2020 Q1 2020 (2) (3) Revenues $6,000 - 6,050 $1,450 - 1,460 (4) (5) Adjusted EBITDA $2,858 - 2,908 $686 - 696 Adjusted EBITDA Margin % ~48% ~47% Recurring Capital Expenditures $170 - 180 $19 - 29 % of revenues ~3% ~2% Non-recurring Capital Ex

  12. Slide 12: FY20 Guidance

    FY20 Guidance Revenues Adjusted EBITDA 2020 YoY growth of 8 - 9%, consistent with long-term targets Operating leverage offset by planned higher utilities expense, property taxes and strategic investments Normalized (1) 8 - 9% Constant Currency YoY Growth 48.3% As-reported Margin 47.9% ($M) 8 - 9% (4

  13. Slide 13: Q1 20 Guidance

    Q1 20 Guidance Revenues Adjusted EBITDA Normalized (1) (2) Constant Currency ~2% As-reported Margin YoY Growth ($M) ~3% 47.7% 47.9% 47.8% 47.5% $1,450 - 1,460 ~2% $690 - 700 $686 - 696 $680 -$4 $676 $5 $1,421 $1,417 $4 (1) Q4 19 Reported Normalizing (1) Q4 19 Normalized Q1 20 Guidance Q4 19 Reported

  14. Slide 14: FY20 AFFO and AFFO per Share Guidance

    (1) FY20 AFFO and AFFO per Share Guidance Strong full year growth in AFFO (11 - 14%) and AFFO per share (9 -11%) Share Count (Diluted) ($M except AFFO per Share) Normalized AFFO per Share (Diluted) (2) Constant Currency AFFO YoY Growth 11 - 14% 80.2M 84.7M 86.3M 86.3M $20.69 $22.81 $24.54 – 25.12 $2

  15. Slide 15: Dividend Outlook

    Dividend Outlook Annual Cash Dividend ($M) ~10% +14% ~$912 $826 $727 $612 $492 2020E Cash Dividend of ~$912M • Continued growth of our annual total 46% 43% 44% 43% 43% cash dividend amount Payout Payout Payout Payout Payout Ratio Ratio Ratio Ratio Ratio 2016 2017 2018 2019 E 2019 E • First quarter d

  16. Slide 16: Supplemental Financial and Operating Data

    Supplemental Financial and Operating Data • 210 Data Centers • 363,000+ Total Interconnections • 20+ years of deep expertise • 55 Metros • The most networks, clouds and IT designing and implementing services companies on one platform customer architectures • 5 Continents • The world’s largest Intern

  17. Slide 17: Equinix Overview

    (1) Equinix Overview • Global footprint: 210 data centers in 55 metros Unique Portfolio of Data • Network dense: 1,800+ networks; 100% of Tier 1 Network Routes Center Assets • Cloud dense: 2,900+ Cloud & IT service providers • Interconnected ecosystems: 363,000+ Total Interconnections • 2020 expecte

  18. Slide 18: Pressing Our Advantage in All Markets

    Pressing Our Advantage in All Markets Equinix global reach expanding across 55 metro areas and 26 countries 5 Continents 26 Countries 55 Metro areas 210 Data centers AMERICAS EMEA ASIA-PACIFIC % of Customers in Platform Equinix 20 Metros 22 Metros 13 Metros Multiple Locations (1) • Geographic footpr

  19. Slide 19: xScale Announced Developments

    xScaleTM Announced Developments Phase Phase Phase Capacity in Phase Phase Phase Capacity in Capacity Capex Open Future Phases Capacity Capex Open Future Phases 750 950 5,525 Q3 Final Q4 LD13x Phase 3 Cab-e / $45M 2019 TY12x Phase 1 Cab-e / $147M 2020 Cab-e / Phase 6 MW 8 MW 45 MW (1) GIC & Equinix E

  20. Slide 20: Customer Revenues Mix

    Customer Revenues Mix Diversified Revenues across Customer, Region and Industry segments Revenues Mix Customers and Churn Top 10 Customers Financial Services EMEA Rank Type of Customer %MRR Region Count IBX Count 16% 33% 1 Network 3.1% 3 126 INT Network 18% Asia- 2 Cloud & IT Services 2.5% 3 60 Ente

  21. Slide 21: Non-Financial Metrics

    (1) Non-Financial Metrics FY 2018 FY 2019 Acquisitions/ Total Organic Total Organic Adjustments (2) Q4 Q1 Q2 Q3 Q4 Q4 Q4 QoQ Interconnections Americas 145,900 147,800 149,600 151,800 153,900 - 153,900 2,100 EMEA 115,500 117,900 119,900 122,900 124,800 - 124,800 1,900 Asia-Pacific 57,300 58,500 59,50

  22. Slide 22: Equinix Announced Expansions

    Equinix Announced Expansions Cabinet(1) Equivalent 2020 2021 2022 Total Capex(1) Capacity In Data Center Status Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 $US millions Ownership Future Phases LA4 phase 3 (Los Angeles) Open 450 $15 Owned 1,600 BO2 phase 2 (Boston) Previously Announced 550 $32 Owned 500 CH3 phase

  23. Slide 23: Long-Term Lease Renewals

    Long-Term Lease Renewals Weighted average lease maturity of greater than 18 years including extensions (1) Global Lease Portfolio Expiration Waterfall Equinix Owned Sites (2) % Leases Renewing by Square Footage • Own 93 of 210 Data Centers Last Possible Expiration Date • 14.2M of 24.2M total gross s

  24. Slide 24: Same Store Operating Performance

    (1) (2) Same Store Operating Performance Revenues ($M) Cash Cost, Gross Profit and PP&E ($M) Cash Cost Trailing 4-Qtr Inter- Services/ Total Non- Total of Cash Gross Cash Gross Gross Cash Return on Category Colocation connection Other Recurring recurring Revenues Revenues Profit Margin % PP&E Gross

  25. Slide 25: Consolidated Portfolio Operating Performance

    (1) Consolidated Portfolio Operating Performance Cabinets Billed Q4 19 Revenues ($M) Total Cabinet Owned % Cabinet Cabinets Utilization Total of Total Category # of IBXs Capacity Billed % Recurring (5) Recurring Americas Owned (2) 45 76,500 56,800 74% $413 Leased 41 34,400 28,200 82% $196 Americas T

  26. Slide 26: Data Center Portfolio Composition

    (1) (2) (3) (4) Data Center Portfolio Composition Metro Count Stabilized Expansion New Acquisition xScale Owned Leased Atlanta 5 AT2, AT3, AT4, AT5 AT1 AT4 AT1, AT2, AT3, AT5 Bogota 1 BG1 BG1 Boston 2 BO1 BO2 BO2 BO1 Chicago 5 CH1, CH2, CH4, CH7 CH3 CH3, CH7 CH1, CH2, CH4 Culpeper 4 CU1,CU2, CU3 CU4

  27. Slide 27: Adjusted Corporate NOI

    (1) Adjusted Corporate NOI ($M, except # of IBXs) Calculation Of Adjusted Corp NOI Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 # of IBXs (1) 204 203 202 201 199 (2) Recurring Revenues $1,333 $1,316 $1,301 $1,273 $1,228 Recurring Cash Cost of Revenues Allocation (425) (412) (408) (386) (387) Cash Net Ope

  28. Slide 28: Adjusted NOI Composition – Organic

    Adjusted NOI Composition – Organic (1) Q4 2019 Total Cabinet Q4 2019 Quarterly # of Cabinet Cabinets Utilization Recurring Adjusted NOI Category IBXs Capacity Billed % Revenues ($M) ($M) % NOI Stabilized Owned (2) 45 71,500 60,900 85% $373 $267 33% Leased 91 82,400 68,600 83% $434 $248 31% Stabilize

  29. Slide 29: Components of Net Asset Value

    Components of Net Asset Value Operating Portfolio Adjusted Q4 19 Quarterly Ownership Reference NOI Adjusted NOI ($M) Stabilized Owned Adjusted NOI Segments $267 Stabilized Leased Adjusted NOI Segments $248 Expansion Owned Adjusted NOI Segments $199 Expansion Leased Adjusted NOI Segments $88 Other Re

  30. Slide 30: Debt Summary

    Debt Summary Spread / Interest First Call First Call / Balance Debt Coupon Rate Maturity Date Current Call ($M) Debt Amortization Revolver L + 100 - Dec-22 - - $ - Term Loan A - SEK, GBP, JPY (1) L + 120 1.594% Dec-22 - - 1,287 • $1.29B multi-currency Term Loan A Senior Notes amortizes at 5% per yea

  31. Slide 31: Shares Forecast

    Shares Forecast (‘M) Fully Diluted Weighted Average Shares Common Stock Outstanding 85.3 85.3 -0.3 84.8 ~86.3 0.5 84.1 ~86.1 0.7 80.7 85.3 1.5 1.5 1.2 1.3 1.3 Shares Est. Employee Est. Shares Est. Weighted Est. Weighting Est. Fully Diluted Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Outstanding @ Equity Awards Ou

  32. Slide 32: Capital Expenditures Profile

    Capital Expenditures Profile ($M) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Recurring IBX Maintenance 63 34 26 11 49 Sustaining IT & Network 10 7 4 6 12 Re-configuration Installation 8 6 7 4 9 Subtotal - Recurring 81 47 37 21 70 Non-Recurring IBX Expansion 496 412 325 270 491 Transform IT, Network & O

  33. Slide 33: FX Rates, Hedging and Currencies

    FX Rates, Hedging and Currencies (4) Currency % of Revenues Revenue FX Rates (2) Blended (3) (4) Guidance (1) Blended (2) % of CHF GBP Currency Hedge Rate Guidance Rate Hedge % Revenues 1% Rate EUR 9% HKD USD 1.00 43% 20% 4% AUD EUR to USD 1.12 1.17 1.15 55% 20% 4% GBP to USD 1.32 1.32 1.32 64% 9% J

  34. Slide 34: Industry Analyst Reports

    Industry Analyst Reports Solution Category Reports • IDC names Equinix a Leader in Colocation & Interconnection Services, IDC, 1/10/20 • Infrastructure is Everywhere: The Evolution of Data Centers, Gartner, 7/18/19 Interconnection • Colocation Cloud Interconnection Requires a Purposeful, Planned App

  35. Slide 35: Equinix Leadership and Investor Relations

    Equinix Leadership and Investor Relations Executive Team Equinix Investor Relations Contacts Equity Research Analysts Katrina Rymill Bank of America Michael Funk VP, IR and Sustainability Berenberg Nate Crossett 650-598-6583 BMO Capital Markets Ari Klein krymill@equinix.com Citigroup Mike Rollins Ke

  36. Slide 36: Appendix: Non-GAAP Financial Reconciliations & Definitions

    Appendix: Non-GAAP Financial Reconciliations & Definitions Confidential – © 2020 Equinix Inc. Equinix.com 36

  37. Slide 37: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 37

  38. Slide 38: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 38

  39. Slide 39: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 39

  40. Slide 40: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 40

  41. Slide 41: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 41

  42. Slide 42: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 42

  43. Slide 43: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 43

  44. Slide 44: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Consolidated NOI calculation Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 (unaudited and in thousands) Revenues $ 1,417,135 $ 1,396,810 $ 1,384,977 $ 1,363,218 $ 1,310,083 Non-Recurring Revenues (NRR) (1) 75,369 77,279 78,456 87,343 80,242 Other Revenues (2) 8,756 3,523 5,859 2,7

  45. Slide 45: Non-GAAP Reconciliations

    Non-GAAP Reconciliations (unaudited and in thousands) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Income from Operations $ 312,974 $ 285,368 $ 291,781 $ 279,508 $ 270,717 Adjustments: Depreciation, Amortization and Accretion Expense 328,295 321,746 320,550 314,705 305,130 Stock-based Compensation Expens

  46. Slide 46: Non-GAAP Reconciliations

    Non-GAAP Reconciliations NAREIT Funds From Operations (NAREIT FFO) - We calculate Funds From Operations in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT FFO represents net income (loss), excluding gains (or losses) from disp

  47. Slide 47: Definitions: Non-financial Metrics, IBX growth, REIT and Capital Expenditures

    Definitions: Non-financial Metrics, IBX growth, REIT and Capital Expenditures Non-financial Metrics MRR per Cab: Monthly recurring revenues per billed cabinet: (current quarter monthly recurring revenues / 3) divided by ((quarter end cabinets billing prior quarter + quarter end cabinets billing curr

  48. Slide 48: Confidential – © 2020 Equinix Inc. Equinix.com

    Confidential – © 2020 Equinix Inc. Equinix.com 48

Equinix — Q4 2019 Earnings Presentation on 6ix