Equinix Reports Fourth Quarter and Year End 2007 Results
o Increased 2007 annual revenues to $419.4 million, a 46% increase over the previous year
o Increased 2007 annual EBITDA to $155.4 million, a 52% increase over the previous year
o Raised 2008 annual revenue guidance to $650.0 to $665.0 million and EBITDA guidance to $251.0 million to $257.0 million
FOSTER CITY, CA - February 13, 2008 - Equinix, Inc. (Nasdaq: EQIX), the leading provider of network-neutral data centers and Internet exchange services, today reported quarterly and year-end results for the period ended December 31, 2007.
Revenues were $138.7 million for the fourth quarter, a 34% increase over the previous quarter, and $419.4 million for the year-ended December 31, 2007, a 46% increase over 2006 revenues. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $131.6 million for the fourth quarter, a 33% increase over the previous quarter, and $399.6 million for the year-ended December 31, 2007, a 46% increase over 2006. Non-recurring revenues were $7.1 million in the quarter and $19.8 million for the year-ended December 31, 2007.
Cost of revenues were $92.5 million for the fourth quarter and $263.7 million for the year-ended December 31, 2007, a 40% increase over cost of revenues for 2006. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $33.0 million for the fourth quarter and $98.3 million for the year, were $59.5 million for the fourth quarter, a 48% increase over the previous quarter, and $165.4 million for the year-ended 2007, a 48% increase over 2006. Cash gross margins, defined as gross profit less depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 57%, down from 61% the previous quarter and 63% the same quarter last year. The reduction in cash gross margins reflects the first full quarter's results from the company's operations in Europe. Cash gross margins were 61% for the full year of 2007, the same as in the prior year.
Selling, general and administrative expenses were $46.8 million for the fourth quarter and $146.5 million for the year-ended December 31, 2007. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $14.6 million for the fourth quarter and $47.9 million for the year, were $32.2 million for the fourth quarter, a 40% increase over the previous quarter, and $98.6 million for 2007, a 34% increase over 2006.
Net loss for the fourth quarter was $6.1 million, including stock-based compensation expense of $11.7 million. This represents a basic and diluted net loss per share of $0.17 based on a weighted average share count of 36.0 million. Net loss for the year-ended December 31, 2007 was $5.2 million, including stock-based compensation expense of $42.7 million, or a basic and diluted net loss per share of $0.16 based on a weighted average share count of 32.1 million.
EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation expense, restructuring charges and any gains or losses from asset sales, for the fourth quarter was $47.1 million, an increase of 16% from the previous quarter, and $155.4 million for the year-ended 2007, up 52% from 2006.
"Equinix delivered exceptional results in 2007, creating a strong platform for growth in 2008," said Steve Smith, CEO of Equinix. "Although we continue to closely monitor our leading indicators, we continue to see no let up in demand. Strong day-to-day execution, a fully funded expansion plan, and a continued focus on customer requirements will accelerate our market leadership in 2008."
Capital expenditures in the fourth quarter were $121.0 million, of which $17.9 million was attributed to ongoing capital expenditures and $103.1 million was attributed to expansion capital expenditures. Capital expenditures for the year-ended December 31, 2007, excluding purchases of real estate and the IXEurope acquisition, were $416.8 million, of which $43.6 million was attributed to ongoing capital expenditures and $373.2 million was attributed to expansion capital expenditures. In addition, the Company invested $120.5 million to acquire properties in the Los Angeles and Silicon Valley markets in 2007.
The Company generated cash from operating activities of $14.0 million for the fourth quarter as compared to $48.7 million in the previous quarter, as the Company settled outstanding obligations related to the IXEurope acquisition. Cash generated from operating activities for the year-ended December 31, 2007 was $121.0 million as compared to $75.9 million in the previous year. Cash used in investing activities was $103.4 million in the fourth quarter as compared to $718.2 million in the previous quarter. Cash used in investing activities for the year was $1.0 billion as compared to $155.0 million in the previous year.
As of December 31, 2007, the Company's cash, cash equivalents and investments were $383.9 million, as compared to $156.5 million as of December 31, 2006.
Other Company Developments & Metrics
o On February 6, 2008, Equinix acquired Virtu Secure Webservices B.V., a provider of network-neutral data center services in the Netherlands
o On a weighted average basis, excluding approximately 14,100 available cabinet equivalents attributed to the Europe region at the end of 2007, the number of cabinets billing was approximately 21,400 representing an approximate utilization rate of 76%
o U.S. interconnection service revenues were 20% of U.S. revenues for the quarter and 21% for the year-ended December 31, 2007. Interconnection services represented approximately 15% of total worldwide revenues for the quarter and 18% for the year-ended December 31, 2007
Business Outlook
For the first quarter of 2008, the Company expects revenues to be in the range of $151.0 to $152.0 million. Cash gross margins are expected to be approximately 58%. Cash selling, general and administrative expenses are expected to be approximately $34.0 million. EBITDA for the quarter is expected to be between $53.0 and $54.0 million. Capital expenditures for the first quarter of 2008 are expected to be $110.0 to $115.0 million, comprised of approximately $20.0 million of ongoing capital expenditures and $90.0 to $95.0 million of expansion capital expenditures.
For the full year of 2008, total revenues are expected to be in the range of $650.0 to $665.0 million, including approximately $10.0 million attributed to the Virtu acquisition. Total year cash gross margins are expected to be approximately 60%. Cash selling, general and administrative expenses are expected to be approximately $135.0 million. EBITDA for the year is expected to be between $251.0 and $257.0 million, including approximately $1.0 million attributed to the Virtu acquisition. Capital expenditures for 2008 are expected to be in the range of $335.0 to $340.0 million, comprised of approximately $50.0 million of ongoing capital expenditures and $285.0 to $290.0 million of expansion capital expenditures. Expansion capital expenditures are for the announced expansions in Amsterdam, Frankfurt, Hong Kong, London, Los Angeles, Paris, Silicon Valley, Singapore, Sydney, Tokyo and Washington, D.C. markets.
The Company will discuss its results and guidance on its quarterly conference call on Wednesday, February 13, 2008, at 5:30 p.m. ET (2:30 p.m. PT). To hear the conference call live, please dial 210-839-8500 (domestic and international) and reference the passcode (EQIX). A simultaneous live Webcast of the call will be available over the Internet at www.equinix.com, under the Investor Relations heading.
A replay of the call will be available beginning on Wednesday, February 13, 2008 at 7:30 p.m. (ET) through March 12, 2008 by dialing 203-369-1627. In addition, the Webcast will be available on the company's Web site at www.equinix.com. No password is required for either method of replay.
About Equinix
Equinix is the leading global provider of network-neutral data center and interconnection services, offering premium colocation, traffic exchange and outsourced IT infrastructure solutions. Global enterprises, content companies, systems integrators and network service providers look to Equinix Internet Business Exchange (IBX®) centers for world-class reliability and network diversity. Equinix IBX centers serve as critical, core hubs for IP networks and Internet operations worldwide. With 39 IBX centers located in 18 strategic markets across North America, Europe and Asia-Pacific, Equinix enables customers to reliably operate their mission-critical infrastructure on a global basis.
