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Equinix Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:

10qk

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Equinix Inc. (EQIX) filed Quarterly Report for the period ended 2012-09-30.

Equinix, Inc. has a market cap of $8.76 billion; its shares were traded at around $184.17 with a P/E ratio of 88.7 and P/S ratio of 5.5. Equinix, Inc. had an annual average earning growth of 44.9% over the past 5 years.

Highlight of Business Operations:

EMEA Revenues. Our revenues from the U.K., the largest revenue contributor in the EMEA region, represented approximately 37% and 35%, respectively, of the regional revenues during the three months ended September 30, 2012 and 2011. Our EMEA revenue growth was due to (i) $5.5 million of additional revenues resulting from the ancotel acquisition, (ii) $6.9 million of revenue generated from our recently-opened IBX data center expansion in the Amsterdam, Frankfurt, London and Paris metro areas and (iii) an increase in orders from both our existing customers and new customers during the period as reflected in the growth in our customer count and utilization rate, as discussed above, in both our new and existing IBX data centers. During the three months ended September 30, 2012, the U.S. dollar was generally stronger relative to the British pound, Euro and Swiss Franc than during the three months ended September 30, 2011, resulting in approximately $9.5 million of unfavorable foreign currency impact to our EMEA revenues during the three months ended September 30, 2012 when compared to average exchange rates of the three months ended September 30, 2011. We expect that our EMEA revenues will continue to grow in future periods as a result of continued growth in recently-opened IBX data centers or IBX data center expansion currently taking place in the Zurich metro area, which is expected to open during the first half of 2013. Our estimates of future revenue growth take account of known or anticipated changes in recurring revenues attributed to customer bookings, customer churn or changes or amendments to customers contracts.

EMEA Revenues. Our revenues from the U.K., the largest revenue contributor in the EMEA region for the period, represented approximately 38% of the regional revenues during the nine months ended September 30, 2012. During the nine months ended September 30, 2011, our revenues from Germany and the U.K., the largest revenue contributors in the EMEA region for the period, each represented approximately 34% of the regional revenues. Our EMEA revenue growth was due to (i) $5.5 million of additional revenues from the impact of the ancotel acquisition, (ii) approximately $23.6 million of revenue from our recently-opened IBX data center expansion in the Amsterdam, Frankfurt, London and Paris metro areas and (iii) an increase in orders from both our existing customers and new customers during the period as reflected in the growth in our customer count and utilization rate, as discussed above, in both our new and existing IBX data centers. During the nine months ended September 30, 2012, the U.S. dollar was generally stronger relative to the British pound, Euro and Swiss Franc than during the nine months ended September 30, 2011, resulting in approximately $20.9 million of unfavorable foreign currency impact to our EMEA revenues during the nine months ended September 30, 2012 when compared to average exchange rates of the nine months ended September 30, 2011. We expect that our

EMEA Cost of Revenues. EMEA cost of revenues for the nine months ended September 30, 2012 and 2011 included $50.4 million and $49.1 million, respectively, of depreciation expense. Growth in depreciation expense was primarily due to both our organic IBX center expansion activity and the ancotel acquisition. Excluding depreciation expense, the increase in our EMEA cost of revenues was primarily due to (i) $2.1 million of additional cost of revenues from the impact of the ancotel acquisition and (ii) $4.2 million of higher utility costs. During the nine months ended September 30, 2012, the U.S. dollar was generally stronger relative to the British pound, Euro and Swiss Franc than during the nine months ended September 30, 2011, resulting in approximately $12.3 million of favorable foreign currency impact to our EMEA cost of revenues during the nine months ended September 30, 2012 when compared to average exchange rates of the nine months ended September 30, 2011. On a constant currency basis, the increase in EMEA cost of revenues was primarily due to higher utility costs and depreciation expense. We expect EMEA cost of revenues to increase as we continue to grow our business, including the impact of the ancotel acquisition.

Asia-Pacific Cost of Revenues. Asia-Pacific cost of revenues for the nine months ended September 30, 2012 and 2011 included $52.4 million and $32.1 million, respectively, of depreciation expense. Growth in depreciation expense was primarily due to both our organic IBX center expansion activity and the Asia Tone acquisition. Excluding depreciation expense, the increase in Asia-Pacific cost of revenues was primarily due to (i) $4.6 million of additional cost of revenues from the impact of the Asia Tone acquisition, (ii) $7.9 million of higher utility costs and (iii) $2.1 million of higher compensation costs, including general salaries, bonuses, stock-based compensation cost and headcount growth (174 Asia-Pacific cost of revenues employees as of September 30, 2012 versus 148 as of September 30, 2011). During the nine months ended September 30, 2012, the impact of foreign currency fluctuations to our Asia-Pacific cost of revenues was not significant when compared to average exchange rates of the nine months ended September 30, 2011. We expect Asia-Pacific cost of revenues to increase as we continue to grow our business, including the impact of the Asia Tone acquisition.

Investing Activities. The net cash used in investing activities for the nine months ended September 30, 2012 was primarily due to $365.9 million of purchases of investments, $554.1 million of capital expenditures as a result of expansion activity and $273.0 million of cash paid for the Asia Tone and ancotel acquisitions, partially offset by $880.3 million of sales and maturities of investments and $87.4 million of release of restricted cash primarily related to payments made in connection with the Paris 4 IBX financing. The net cash used in investing activities for the nine months ended September 30, 2011 was primarily due to $1.0 billion of purchases of investments principally from the proceeds of our 7.00% senior notes offering, $495.5 million of capital expenditures as a result of expansion activity and $95.9 million of cash deposited into a restricted cash account as collateral for the developer of the Paris 4 IBX during the construction period. During 2012, we expect that our IBX expansion construction activity will be similar to our 2011 levels. However, if the opportunity to expand is greater than planned and we have sufficient funding to increase the expansion opportunities available to us, we may increase the level of capital expenditures to support this growth as well as pursue additional acquisitions or joint ventures. In the fourth quarter of 2012, we received net proceeds from the divestiture of $76.5 million.

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