Slide 1: Q2 2020 Earnings Conference Call
Q2 2020 Earnings Conference Call NASDAQ: EQIX Presented on July 29, 2020 Confidential – © 2020 Equinix Inc. Equinix.com 1
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’s
Slide 3: Q2 2020 Financial Highlights
Q2 2020 Financial Highlights Revenues Recurring Revenues Non-recurring Revenues Revenues Q2 20 ($M) Growth QoQ YoY $1,397 $1,417 $1,445 $1,470 $1,385 Acquisition Revenues: As-reported 2% 6% Axtel: $5M Packet: $9M Normalized and (1) 2% 8% $1,398 Constant Currency $1,306 $1,319 $1,338 $1,362 (1) Norma
Slide 4: Q2 2020 Consolidated Results
Q2 2020 Consolidated Results $M except for AFFO per Share and Q2 20 Non-Financial Metrics Guidance Actual QoQ YoY (1) Revenues $1,446 - 1,466 $1,470 2% 6% Cash Gross Profit $989 2% 7% Cash Gross Margin % 67.3% Cash SG&A $269 -5% 9% Cash SG&A % 18.3% (2) Adjusted EBITDA $679 - 699 $720 5% 6% Adjusted
Slide 5: Americas Performance
Americas Performance Revenues Organic Revenues Axtel/Packet Q2 20 ($M) $662 $661 Revenues Growth (2) (2) $644 $645 $654 QoQ YoY $8 $13 Axtel: $5M Packet: $9M As-reported 0% 3% Normalized and (1) 0% 3% Constant Currency $644 $645 $654 $654 $648 (1) Normalized MRR 1% 3% Adjusted EBITDA Q2 20 (2) Q2 19
Slide 6: EMEA Performance
EMEA Performance Revenues $479 $488 Revenues Q2 20 ($M) $464 $450 $458 Growth QoQ YoY As-reported 2% 8% Normalized and (1) 3% 13% Constant Currency (1) Normalized MRR 7% 16% Adjusted EBITDA Q2 20 Growth QoQ YoY Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 As-reported 6% 16% Adjusted EBITDA Adjusted EBITDA Adjusted
Slide 7: Asia-Pacific Performance
Asia-Pacific Performance Revenues $300 $304 $321 Revenues Q2 20 ($M) $291 $293 Growth QoQ YoY As-reported 6% 10% Normalized and (1) 6% 12% Constant Currency (1) Normalized MRR 4% 10% Adjusted EBITDA Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Growth QoQ YoY Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Ma
Slide 8: Capital Structure
Capital Structure Debt Equity • On June 8, issued $2.6B of Senior Notes at a blended • In May, we executed an equity borrowing rate of 2.07% consisting of: follow-on offering, raising $1.7B of (1) • 1.250% $500M Senior Notes due in 2025 Net Leverage Ratio gross proceeds at $665.00 a share • 1.800% $
Slide 9: Capital Expenditures
Capital Expenditures Recurring Capital Expenditures 5.7% ($M) • Recurring capital expenditures typically $81 trend between 2% and 5% of revenues, 9% 3.4% 12% annually 2.7% $47 • Maintenance capital expenditures can vary 13% 2.1% $37 14% $30 by quarter based on maintenance schedules 18% 78% 1.2% 12%
Slide 10: Stabilized IBX Growth
(1) (2) Stabilized IBX Growth Stabilized, Expansion & New IBXs Stabilized IBX Profitability ($M) Last Quarter $9,111 $3,870 $2,622 $95 Reported # of IBXs Q2 20 Revenues ($M) $10,000 $9,430 $9,000 ~28% annual Cash Gross Profit on Gross PP&E $8,000 investment (5) Expansion: 10%(3) $7,000 Stabilized: G
Slide 11: 2020 Financial Guidance
(1) 2020 Financial Guidance ($M except AFFO per Share) FY 2020 Q3 2020 (2) (3) Revenues $5,919 - 5,989 $1,493 - 1,513 (4) (5) Adjusted EBITDA $2,781 - 2,851 $696 - 716 Adjusted EBITDA Margin % 47 - 48% ~47% Recurring Capital Expenditures $150 - 160 $36 - 46 % of revenues ~3% 2 - 3% Non-recurring Cap
Slide 12: FY20 Guidance
FY20 Guidance (2) Revenues Adjusted EBITDA $23M raise from FX $11M raise from FX Normalized (1) 47.3% As-reported Margin 47.3% 8 - 9% Constant Currency YoY Growth 47.6% Margin excl. Integration Costs 47.6% ($M) $5,919 - 5,989 $2,781 - 2,851 $23 $5,877 - 5,985 $11 $2,765 - 2,845 1 2 Prior Guidance FX
Slide 13: Q3 20 Guidance
Q3 20 Guidance Revenues Adjusted EBITDA As-reported Margin 1 - 3% 49.0% 49.2% 47.3% 47.0% $1,493 - 1,513 ~-2% ($M) $720 $725 $5 $701 - 721 $696 - 716 -$5 $1,475 $1,470 $5 (1) Q2 20 Reported Normalizing (1) Q2 20 Normalized Q3 20 Guidance Q2 20 Reported Normalizing (2) Q2 20 Q3 20 Integration (3) Q3
Slide 14: FY20 AFFO and AFFO per Share Guidance
(1) FY20 AFFO and AFFO per Share Guidance $54M AFFO raise from refinancing, taxes and FX; on track to deliver strong AFFO per share normalized growth of 8 - 12% ($M except AFFO per Share) Share Count (Diluted) Normalized Constant Currency AFFO (2) AFFO per Share (Diluted) YoY Growth 14 – 18% 1 Raise
Slide 15: Dividend Outlook
Dividend Outlook Annual Cash Dividend ($M) ~13% +14% ~$935 $826 $727 $612 $492 2020E Cash Dividend of ~$935M • Continued growth of our annual total 46% 43% 44% 43% 44% cash dividend amount Payout Payout Payout Payout Payout Ratio Ratio Ratio Ratio Ratio 2016 2017 2018 2019 2020 E (1) • Third quarter
Slide 16: Equinix's Covid-19 Response
Equinix’s Covid-19 Response (1) Our Employees and Community Large, established businesses Limited exposure to industries • Our focus continues to be on the health, safety and wellbeing of constitute majority of revenue currently most impacted by Covid-19 our employees, customers and vendors. For our
Slide 17: Supplemental Financial and Operating Data
Supplemental Financial and Operating Data • 214 Data Centers • 378,000+ Total Interconnections • 20+ years of deep expertise • 56 Metros • The most networks, clouds and IT designing and implementing services companies on one platform customer architectures • 5 Continents • The world’s largest Intern
Slide 18: Equinix Overview
(1) Equinix Overview • Global footprint: 214 data centers in 56 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: 378,000+ Total Interconnections • 2020 expecte
Slide 19: Pressing Our Advantage in All Markets
Pressing Our Advantage in All Markets Equinix global reach expanding across 56 metro areas and 26 countries 5 Continents 26 Countries 56 Metro areas 214 Data centers AMERICAS EMEA ASIA-PACIFIC % of Customers in Platform Equinix 20 Metros 23 Metros 13 Metros Multiple Locations (1) • Geographic footpr
Slide 20: xScale: Amplifying Our Balance Sheet to Extend Cloud Leadership
xScale: Amplifying Our Balance Sheet to Extend Cloud Leadership Objective Status Phase Open • JV structures enable pursuit of strategic Hyperscale deployments to minimize dilution of Equinix returns London 13x EMEA JV Open and limits consumption of balance sheet and investment capacity Paris 8x EMEA
Slide 21: Bell Canada: Strategic, Complementary and Value Accreting
Bell Canada: Strategic, Complementary and Value Accreting Transforming Equinix Canada into a nationwide platform and highlighting our Cloud / Enterprise ecosystem Scale & • Sophisticated top-tier global economy with strong economic ties to the U.S. #10 Global Economy(1) Reach • 13 high-quality data
Slide 22: Customer Revenues Mix
Customer Revenues Mix Diversified Revenues across Customer, Region and Industry segments Revenues Mix Customers and Churn Top 10 Customers Financial Services Rank Type of Customer %MRR Region Count IBX Count 16% EMEA 33% 1 Network 2.7% 3 137 INT 2 Cloud & IT Services 2.3% 3 62 Network 18% Asia- Ente
Slide 23: Non-Financial Metrics
(1) Non-Financial Metrics FY 2019 FY 2020 Q2 Q3 Q4 Q1 Q2 QoQ Interconnections Americas 149,600 151,800 153,900 155,700 158,000 2,300 EMEA 119,900 122,900 124,800 127,000 128,600 1,600 Asia-Pacific 59,500 60,900 62,200 63,400 65,600 2,200 Worldwide Cross Connections 329,000 335,600 340,900 346,100 35
Slide 24: Equinix Announced Expansions
Equinix Announced Expansions (1) Cabinet Equivalent (1) 2021 Total Capex Capacity In Data Center Status Q2 Q3 Q4 Q1 Q2 Q3 Q4 $US millions Ownership Future Phases CH3 phase 6 (Chicago) Open 1,225 $31 Owned - DC15 phase 1 (Washington D.C.) Open 1,600 $111 Owned 1,600 DA11 phase 1 (Dallas) TR2 phase 3
Slide 25: Long-Term Lease Renewals
Long-Term Lease Renewals Weighted average lease maturity of greater than 18 years including extensions (1) Global Lease Portfolio Expiration Waterfall Equinix Owned Sites (2) (3) (4) % Leases Renewing by Square Footage • Own 98 of 214 Data Centers Last Possible Expiration Date • 14.8M of 24.9M total
Slide 26: Same Store Operating Performance
(1) Same Store Operating Performance Revenues ($M) Cash Cost, Gross Profit and PP&E ($M) Trailing 4-Qtr Inter- Services/ Total Non- Total Cash Cost of Cash Gross Cash Gross Gross Cash Return on Category Colocation connection Other Recurring recurring Revenues Revenues Profit Margin % PP&E Gross PP&E
Slide 27: Consolidated Portfolio Operating Performance
Consolidated Portfolio Operating Performance (1) Cabinets Billed Q2 20 Revenues ($M) Total Cabinet Owned % Cabinet Cabinets Utilization Total of Total Category # of IBXs Capacity Billed % Recurring Recurring Americas Owned (2) 48 81,500 58,900 72% $418 Leased 40 33,900 28,000 83% $193 Americas Total
Slide 28: Data Center Portfolio Composition
Data Center Portfolio Composition Metro Count Stabilized Expansion New Acquisition xScale Owned Leased Atlanta Bogota 5 AT2, AT3, AT4, AT5 1 BG1 AT1 AT4 BG1 AT1, AT2, AT3, AT5 Change Summary (1) Boston 2 BO1 BO2 BO2 BO1 Chicago 5 CH1, CH2, CH4, CH7 CH3 CH3, CH7 CH1, CH2, CH4 Culpeper 4 CU1,CU2, CU3
Slide 29: Adjusted Corporate NOI
(1) Adjusted Corporate NOI ($M, except # of IBXs) Calculation Of Adjusted Corp NOI Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 # of IBXs (1) 211 208 204 203 202 (2) Recurring Revenues $1,385 $1,355 $1,333 $1,316 $1,301 Recurring Cash Cost of Revenues Allocation (416) (423) (425) (412) (408) Cash Net Ope
Slide 30: Adjusted NOI Composition – Organic
(1) Adjusted NOI Composition – Organic Q2 2020 Total Cabinet Q2 2020 Quarterly # of Cabinet Cabinets Utilization Recurring Adjusted NOI Category IBXs Capacity Billed % Revenues ($M) ($M) % NOI Stabilized Owned (2) 54 94,000 80,600 86% $472 $336 39% Leased 94 89,000 74,300 83% $474 $284 33% Stabilize
Slide 31: Components of Net Asset Value
Components of Net Asset Value Operating Portfolio Adjusted Q2 20 Quarterly Adjusted Ownership Reference NOI NOI ($M) Stabilized Owned Adjusted NOI Segments $336 Stabilized Leased Adjusted NOI Segments $284 Expansion Owned Adjusted NOI Segments $159 Expansion Leased Adjusted NOI Segments $85 Other Re
Slide 32: Debt Summary
Debt Summary Spread / Interest First Call First Call / Balance (1) Debt Maturity Coupon Rate Date Current Call ($M) Debt Amortization Revolver L + 100 1.268% Dec-22 - - - Term Loan A - SEK, GBP, JPY (2) L + 120 1.280% Dec-22 - - 1,218 • €750M 2024 Senior Notes and $1.1B 2026 Senior Notes (3) USD due
Slide 33: Shares Forecast
Shares Forecast (‘M) Fully Diluted Weighted Average Shares Common Stock Outstanding 88.5 ~88.9 0.7 -1.3 ~88.3 2.8 85.9 85.3 85.3 84.8 85.3 0.8 1.5 1.6 1.5 1.3 1.3 Shares Est. Employee Q1 - Q2 Equity (5) Est. Shares Est. Weighted Est. Weighting Est. Fully Diluted Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Outstan
Slide 34: Capital Expenditures Profile
Capital Expenditures Profile ($M) Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Recurring IBX Maintenance 19 9 63 34 26 Sustaining IT & Network 5 5 10 7 4 Re-configuration Installation 7 4 8 6 7 Subtotal - Recurring 30 18 81 47 37 Non-Recurring IBX Expansion 372 310 496 412 325 Transform IT, Network & Off
Slide 35: FX Rates, Hedging and Currencies
FX Rates, Hedging and Currencies (4) Currency % of Revenues Revenue FX Rates (4) (1) Blended Blended % of CHF GBP Currency Guidance Rate Hedge Rate (2) (3) Guidance Rate Hedge %(2) Revenues 1% EUR 10% HKD USD 1.00 41% 20% 4% EUR to USD 1.12 1.13 1.13 60% 20% AUD 4% GBP to USD 1.24 1.29 1.28 70% 10%
Slide 36: Industry Analyst Reports
Industry Analyst Reports Solution Category Reports • Equinix partners with GIC again to form Joint Venture to Develop xScale, 451 Research, 5/5/20 • COVID-19: Keeping the data center lights on during a crisis, 451 Research, 3/25/20 Interconnection • Trends Driving the MTDC and Services Industry 2020
Slide 37: 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 Barclays Tim Long 650-598-6583 Berenberg Nate Crossett krymill@equinix.com BMO Capital Markets Ari Klein Keith T
Slide 38: Appendix: Non-GAAP Financial Reconciliations & Definitions
Appendix: Non-GAAP Financial Reconciliations & Definitions Confidential – © 2020 Equinix Inc. Equinix.com 38
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 39
Slide 40: Non-GAAP Reconciliations
Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 40
Slide 41: Non-GAAP Reconciliations
Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 41
Slide 42: Non-GAAP Reconciliations
Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 42
Slide 43: Non-GAAP Reconciliations
Non-GAAP Reconciliations Confidential – © 2020 Equinix Inc. Equinix.com 43
Slide 44: Non-GAAP Reconciliations
Non-GAAP Reconciliations Consolidated NOI calculation Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 (unaudited and in thousands) Revenues $1,470,121 $1,444,542 $1,417,135 $1,396,810 $1,384,977 (1) Non-Recurring Revenues (NRR) 68,832 77,920 75,369 77,279 78,456 (2) Other Revenues 16,208 11,990 8,756 3,523
Slide 45: Non-GAAP Reconciliations
Non-GAAP Reconciliations (unaudited and in thousands) Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Income from Operations $ 282,488 $ 253,484 $ 312,974 $ 285,368 $ 291,781 Adjustments: Depreciation, Amortization and Accretion Expense 348,434 337,431 328,295 321,746 320,550 Stock-based Compensation Expens
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
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
Slide 48: Confidential – © 2020 Equinix Inc. Equinix.com
Confidential – © 2020 Equinix Inc. Equinix.com 48