Equinix, Inc. · NASDAQ:EQIX

Equinix — Q3 2015 Earnings Presentation

49 slides from Equinix's earnings presentation, Oct 28, 2015

  1. Slide 1: Q3 2015 Earnings Conference Call

    Q3 2015 Earnings Conference call NASDAQ: EQIX Presented on October 28, 2015 © 2015 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 Equi

  3. Slide 3: Q3 2015 Financial Highlights

    Q3 2015 Financial Highlights Revenues ($M) Recurring Revenues Non-recurring Revenues Revenues of $686.6 Million $665.6 $686.6 $643.2 $620.4 $638.1 • Revenues up 3% QoQ and 11% YoY • Revenues up 4% QoQ and 17% YoY on a normalized and constant currency basis (1) • Recurring revenues are 94% of total r

  4. Slide 4: Bit-isle Adds Significant Scale to Platform Equinix

    Bit-isle Adds Significant Scale to Platform Equinix • Transaction Overview Tokyo Central Business District (1) – Aggregate equity value of $280 million (¥33.3 billion) – Enterprise value of $440 million (¥52.4 billion) (1) Proximate to TY4 – Expect to be accretive to Equinix’s AFFO per share upon cl

  5. Slide 5: Enterprise Go-to-market

    Enterprise Go-to-market Quantifying Equinix value around four customer use cases(1) PEOPLE LOCATIONS CLOUDS DATA Customer Engineering & Financial Services Media & Information Industrial Conglomerate Industry Construction Inadequate user Unsustainable growth in Inefficient & unsecure Insufficient cus

  6. Slide 6: Q3 2015 Consolidated Results

    Q3 2015 Consolidated Results Quarter ($M Except for Non-Financial Metrics) Q3 15 Q3 15 Q2 15 Q3 14 Q3 15 vs. Q3 15 vs. Guidance Actual Actual Actual Q2 15 % ∆ Q3 14 % ∆ Revenues $681 - $685 $ 686.6 $ 665.6 $ 620.4 3% 11% Cash Gross Profit 475.0 460.8 424.0 3% 12% Cash Gross Profit Margin % 68 - 69%

  7. Slide 7: Americas Performance

    Americas Performance Q3 Highlights Q3 Business Conditions ($M) • Q3 revenues up 3% QoQ and 10% YoY on an as-reported basis $356.4 $364.0 $371.4 $382.6 • Q3 revenues up 4% QoQ and 13% YoY on a normalized and constant $347.4 currency basis (1) • Q3 Adjusted EBITDA up 2% QoQ and 9% YoY on an as-reporte

  8. Slide 8: EMEA Performance

    EMEA Performance Q3 Highlights Q3 Business Conditions ($M) • Q3 revenues up 2% QoQ and 10% YoY on an as-reported basis $174.0 $177.6 $167.1 $164.6 $161.6 • Q3 revenues up 3% QoQ and 22% YoY on a normalized and constant currency basis (1) • Q3 Adjusted EBITDA up 2% QoQ and 17% YoY on an as-reported $

  9. Slide 9: Asia-Pacific Performance

    Asia-Pacific Performance Q3 Highlights Q3 Business Conditions ($M) $120.2 $126.5 • Q3 revenues up 5% QoQ and 14% YoY on an as-reported basis $111.4 $114.6 $114.6 • Q3 revenues up 6% QoQ and 26% YoY on a normalized and constant currency basis (1) $65.9 • Q3 Adjusted EBITDA up 8% QoQ and 22% YoY on an

  10. Slide 10: Capital Structure and Sources and Uses of Cash

    Capital Structure and Sources and Uses of Cash • Ample liquidity to fund growth and dividend • Flexible capital structure with additional capacity Capitalization Table Sources and Uses of Cash (4) Q3 15 Q2 15 Sources: $3.0B Capital Leases $ 1,225 $ 1,245 Other Debt 3,448 3,472 Available Line Total D

  11. Slide 11: Dividend Outlook

    Dividend Outlook AFFO outlook ($M) (1) • 2015 guidance of $866-870M $866-870 • Implies growth of 14% YoY on an as-reported basis, and 24% growth YoY on a normalized $762 (2) and constant currency basis $680 Dividend growth potential • AFFO growth provides capacity for long-term dividend growth 2015

  12. Slide 12: Capex

    Capex Q3 2015 Capex and Regional Breakout Recurring Non-Recurring ($M) ($M) Recurring capital Sustaining IT expenditures & Network 25% APAC 35% • Expenditures to extend useful life of Americas 46% IBXs or other Equinix assets in Maintenance 54% support of current revenues Installation 21% • Recurrin

  13. Slide 13: Stabilized IBX Growth

    Stabilized IBX Growth (1) Stabilized, Expansion & New IBXs Stabilized IBX Profitability (3) (4) (4) (6) (2) (1) New IBXs where Phase 1 began operating after January 1, 2014 (3) Investment (Q3 15 Gross PP&E) includes real estate acquisition costs, capitalized leases Expansion IBXs where Phase 1 began

  14. Slide 14: 2015 Revenues Bridge

    2015 Revenues Bridge As-Reported Normalized & Constant FX & Hedging Currency Q4 15 E FY 2015 E (3) 16% YoY 10% YoY 2% 3% 0% 1% 703 13 4 2,698 687 2,690 703 (1) (2) Q3 15 Q4 15 Mid- Q4 15 @ CC Prior 2015 2015 Current 2015 Current Point Guidance Guidance Mid-Point Guidance Mid-Point Guidance @ CC (1)

  15. Slide 15: 2015 Adjusted EBITDA Bridge

    2015 Adjusted EBITDA Bridge As-Reported Normalized & Constant Adjusted EBITDA Margin % Currency FX & Hedging Q4 15 E FY 2015 E (3) 19% YoY 46.8% 46.9% 46.7% 47.0% 14% YoY 3% 4% 1% 1% 330 1,269 4 321 4 1,255 330 (1) (2) Q3 15 Q4 15 Mid- Q4 15 @ CC Prior 2015 2015 Current 2015 Current Point Guidance G

  16. Slide 16: 2015 AFFO Bridge

    Normalized & 2015 AFFO Bridge As-Reported Constant Currency FX & Hedging 24% YoY (5) Change from +14 +2 -5 +5 +9 +25 -12 +13 14% YoY Last Quarter 3% 2% 2% ~276 $11.6M loss on Telecity acquisition-related ~39 hedge in Q3 15 1,269 ~110 855 Does NOT reflect any 12 ~ 36 4 interest expense from any poten

  17. Slide 17: 2015 Financial Guidance

    2015 Financial Guidance (1) $M FY 2015 Q4 2015 (2) (3) Revenues $2,696 - $2,700 $701 - $705 Cash Gross Margin % ~ 69% ~ 69% Cash SG&A $601 - $605 $153 - $157 Cash SG&A % 22 - 23% ~22% (4) (5) Adjusted EBITDA $1,267 - $1,271 $328 - $332 Adjusted EBITDA Margin % ~47.0% ~46.9% Capex $830 - $850 $242 -

  18. Slide 18: Supplemental Financial and Operating Data

    Supplemental Financial and Operating Data Global Interconnection Business Data Centers Ecosystems 105 Data Centers 1,100+ Networks 6,300+ Businesses 11M+ Square Feet 168,700 Cross-connects Equinix Marketplace™ 99.9999% Uptime 100% of Tier 1 Network Revenue Opportunities Record Routes © 2015 Equinix

  19. Slide 19: Equinix Overview

    Equinix Overview (1) Unique portfolio of data center assets Development pipeline • Global footprint: 105 data centers in 33 metros • Long history of development success through • Network dense: 1,100+ networks expansions, campuses and known demand pipeline • Cloud dense: 1,300 Cloud & IT service pro

  20. Slide 20: Equinix Global Platform

    Equinix Global Platform (1) Equinix offers broad geographic reach and significant scale within each region 5 Continents 15 Countries 33 Metro Areas 105 Data Centers Platform Equinix • Geographic footprint is unmatched 15 metros 10 metros 8 metros and remains a unique differentiator 54 IBXs 30 IBXs 2

  21. Slide 21: Customer Revenues Mix

    Customer Revenues Mix (1) Diversified Revenue by Customer, Region & Industry Global Customer Count and Churn % 4% Network Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 (3) Recurring 17% 26% Total Global Customers 6,100 6,200 6,300 6,300 6,300 MIS (3) Gross New Global Customers 140 190 210 170 170 Financial (4) Serv

  22. Slide 22: Non-Financial Metrics

    Non-Financial Metrics (1) FY2014 FY 2015 Q3 Q4 Q1 Q2 Q3 # of Cross-connects INTERCONNECTION Americas 78,300 81,900 83,700 86,300 89,800 1,100+ Networks EMEA 35,700 36,900 38,400 39,700 41,500 168,700+ Cross-connects Asia-Pacific 30,400 31,300 33,500 35,700 37,400 100% of Tier 1 Network Routes Worldw

  23. Slide 23: Equinix Announced Expansions 2015-2016

    Equinix Announced Expansions 2015-2016 Overview of major Equinix IBX data center expansions AMERICAS Sellable Cabinet Total CAPEX* IBX Center Target Open Date Equivalents* (millions U.S.$) Comments GLOBAL TOTALS TR2 phase I (Toronto) Opened Q1 2015 675 $42 Additional capacity for 1,775 cabinet equiv

  24. Slide 24: REIT Conversion Costs & Cash Income Taxes

    (1) REIT Conversion Costs & Cash Income Taxes Description Value/Cash impact D&A Recapture • Reclassifying Equinix assets as “real estate” results in a tax • U.S. tax liabilities related to D&A recapture expected to liability due to longer depreciation and amortization lives be approximately $360 to

  25. Slide 25: Long-Term Lease Renewals

    Long-Term Lease Renewals Average lease maturity greater than 21.5 years including extensions (1) Global Lease Portfolio Expiration Waterfall (2) % Leases Renewing by Square Footage Equinix Owned Sites Last Possible Expiration Date • Own 23 of 105 IBXs • 4.2M of 11.4M total gross square feet 86% (3)

  26. Slide 26: REIT Disclosure Update

    REIT Disclosure Update Equinix real estate portfolio valuation disclosures Same-Store Operating Performance (previously disclosed) – Provides a year-over-year comparison of revenues composition and cash gross margin for a constant set of Stabilized and Expansion properties. Property operating status

  27. Slide 27: Same Store Operating Performance

    Same Store Operating Performance Stabilized and Expansion – Cash Gross Profit grew 11.5% driven by Stabilized assets Revenues #039;000s Cash Cost & Gross Profit #039;000s Cash Cost Trailing 4-Qtr Inter- Services/ Total Non- Total of Cash Gross Cash Gross (1) Cash Return on (1) Category Colocation connecti

  28. Slide 28: Consolidated Portfolio Operating Performance

    Consolidated Portfolio Operating Performance By Region & Ownership – Owned Assets Generated 38% of Our Recurring Revenues Cabinets Billed Revenues (Q3 2015) #039;000s Total Cabinet Owned % Cabinet Cabinets Utilization Inter- Services/ Total Non- Total of Total (4) Category # of IBXs Capacity Billed % C

  29. Slide 29: Portfolio Composition – IBX mapping

    Portfolio Composition – IBX mapping Same-Store Same-Store Same-Store IBX Location Ownership IBX Location Ownership IBX Location Ownership Classification Classification Classification Americas EMEA Asia-Pacific AT1 Atlanta Expansion Leased AM1 * Amsterdam Stabilized Owned HK1 Hong Kong Expansion Leas

  30. Slide 30: Adjusted Corporate NOI

    (1) Adjusted Corporate NOI Calculation Of Adjusted Corp NOI (unaudited) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 (1) # of IBXs 104 104 104 101 100 (2) Recurring Revenues $ 644,455 $ 623,847 $ 608,280 $ 604,917 $ 584,554 Recurring Cash Cost of Revenues Allocation (182,434) (178,578) (170,608) (174,772

  31. Slide 31: Adjusted NOI Composition

    Adjusted NOI Composition By Stabilization and Ownership – Owned Assets and NOI are predominantly in campus locations in our largest global markets Total Cabinet Adjusted NOI by Region Q3 2015 Q3 2015 # of Cabinet Cabinets Utilization Recurring Quarterly Territory IBXs Capacity Billed % % AMER % EMEA

  32. Slide 32: Components of NAV

    Components of NAV (unaudited) Operating Portfolio Adjusted % of Adjusted NOI Quarterly Adjusted Ownership Reference NOI AMER EMEA APAC NOI Stabilized Owned 55% 45% 0% Adjusted NOI Segments $109,424 Stabilized Leased 79% 9% 12% Adjusted NOI Segments 152,922 Expansion Owned 58% 42% 0% Adjusted NOI Seg

  33. Slide 33: Market Capitalization & Debt Summary

    Market Capitalization & Debt Summary Sep 30, Spread / 2015 Debt Coupon Interest Rate Maturity Balance (1) Market Capitalization Summary Term Loan L + 125 1.48% Dec-19 $ 475,631 Common shares outstanding 57,286 ALOG Financing Various 16.09% Various 32,766 Market Price as of Sep 30, 2015 $ 273.40 4.87

  34. Slide 34: REIT Financial Metrics

    REIT Financial Metrics Adjusted EBITDA to AFFO Breakdown FFO, Diluted AFFO & Adjusted EBITDA ($M) per Diluted Share(1) Adjusted EBITDA $5.39 $5.07 $5.17 $5.24 $4.97 $311 $321 $294 $306 $3.64 $3.77 $3.75 $3.55 $284 $3.39 $3.09 $2.87 $2.61 $2.59 $222 $221 $207 $210 $195 Q3 2014 Q4 2014 Q1 2015 Q2 2015

  35. Slide 35: Fully Diluted Weighted Average Shares Forecast

    Fully Diluted Weighted Average Shares Forecast (‘K) ~1,977 ~-1,625 60,200 59,043 ~805 ~1,730 56,451 ~862 Shares outstanding Est. Employee Est. 2015 Special Est. Shares Est. Dilutive Convertible Est. Weighting of Est. Fully Diluted @ 12/31/14 - Actual Equity Awards Distribution outstanding Unissued S

  36. Slide 36: Recurring CapEx

    Recurring CapEx Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Recurring Sustaining IT & Network $ 6,554 $ 8,249 $ 8,859 $ 6,034 $ 5,663 IBX Maintenance 13,886 13,652 8,485 20,612 9,067 Re-configuration Installation 5,467 5,429 5,028 6,478 5,044 Subtotal - Recurring 25,906 27,330 22,373 33,124 19,775 Non-R

  37. Slide 37: Equinix Leadership and Investor Relations

    Equinix Leadership and Investor Relations Executive Team Equinix Investor Relations Contacts Katrina Rymill Paul Thomas VP, Investor Relations Director, Investor Relations 650-598-6583 650-598-6442 krymill@equinix.com pthomas@equinix.com Equinix Media Contacts Steve Smith Keith Taylor Charles Meyers

  38. Slide 38: Appendix: Non-GAAP Financial Reconciliations & Definitions

    Appendix: Non-GAAP Financial Reconciliations & Definitions © 2015 Equinix Inc. Equinix.com 38

  39. Slide 39: Non-GAAP Reconciliations

    Non-GAAP Reconciliations EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended September 30, June 30, September 30, 2015 2015 2014 We define cash cost of revenues as cost of revenues less depreciation, amortization, accret

  40. Slide 40: Non-GAAP Reconciliations

    Non-GAAP Reconciliations EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended September 30, June 30, September 30, 2015 2015 2014 We define cash operating expenses as operating expenses less depreciation, amortization, st

  41. Slide 41: Non-GAAP Reconciliations

    Non-GAAP Reconciliations EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended September 30, June 30, September 30, 2015 2015 2014 We define adjusted EBITDA as income from operations plus depreciation, amortization, accret

  42. Slide 42: Non-GAAP Reconciliations

    Non-GAAP Reconciliations EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended September 30, June 30, September 30, 2015 2015 2014 The geographic split of our adjusted EBITDA is presented below: Americas income from operat

  43. Slide 43: Non-GAAP Reconciliations

    Non-GAAP Reconciliations EQUINIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION (in thousands) (unaudited) Three Months Ended September 30, June 30, September 30, 2015 2015 2014 We define cash gross margins as cash gross profit divided by revenues. Our cash gross margi

  44. Slide 44: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Equinix, Inc. Adjusted EBITDA - Annual Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months Ended Ended Ended Ended Ended Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2014 2013 2012 2011 2010 We define adjusted EBITDA as income from operations plus depreciation,

  45. Slide 45: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Adjusted EBITDA (unaudited and in thousands, except per share amounts) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 CALCULATION OF ADJUSTED EBITDA Income from continuing operations $ 140,883 $ 139,133 $ 151,449 $ 127,826 $ 135,131 $ 124,697 $ 121,612 $ 124

  46. Slide 46: Non-GAAP Reconciliations

    Non-GAAP Reconciliations NAREIT Funds From Operations (NAREIT FFO) (unaudited and in thousands, except per share amounts) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 RECONCILIATION OF NET INCOME (LOSS) TO NAREIT FFO Net income (loss) $ 41,132 $ 59,459 $ 76,452 $(355,103) $ 42,961

  47. Slide 47: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Adjusted Funds From Operations (AFFO) (unaudited and in thousands, except per share amounts) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 NAREIT FFO attributable to common shareholders $ 151,197 $ 167,368 $ 179,190 $(241,338) $ 146,059 $ 109,813 $ 138,732

  48. Slide 48: 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

  49. Slide 49: © 2015 Equinix Inc. Equinix.com

    © 2015 Equinix Inc. Equinix.com 49

Equinix — Q3 2015 Earnings Presentation on 6ix