Breaking News

Sun Hung Kai Says Thomas Kwok Resigns as Chairman After Conviction
Tweet TWEET

Equinix Reports Third Quarter 2013 Results

  Equinix Reports Third Quarter 2013 Results

  *Reported revenues of $540.5 million, a 3% increase over the previous
    quarter and an 11% increase over the same quarter last year
  *Surpassed 124,000 cross-connects on a strong global interconnection
    quarter

Business Wire

REDWOOD CITY, Calif. -- October 23, 2013

Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, today
reported quarterly results for the quarter ended September 30, 2013. The
Company uses certain non-GAAP financial measures, which are described further
below and reconciled to the most comparable GAAP financial measures after the
presentation of our GAAP financial statements.

Revenues were $540.5 million for the third quarter, a 3% increase over the
previous quarter and an 11% increase over the same quarter last year, and
include a $5.3 million reduction in revenues for the third quarter due to the
lengthening of the estimated period that non-recurring installation fees are
recognized, a change in estimate that the Company initiated in the second
quarter of 2013. Recurring revenues, consisting primarily of colocation,
interconnection and managed services were $517.0 million for the third
quarter, a 3% increase over the previous quarter and a 12% increase over the
same quarter last year. Non-recurring revenues were $23.5 million in the
quarter. Churn for the third quarter was 2.5%, up from 2.4% for the previous
quarter and in line with prior guidance.

Regarding the non-recurring installation fee estimate change described above,
the Company is evaluating whether changes in estimate should have been applied
in earlier periods. The Company is currently completing its assessment of this
matter and expects to reach a conclusion by the time it files its Form 10-Q
for the quarterly period ended September 30, 2013. The outcome of this matter
could lead to an adjustment to the Company’s financial results for historical
and future periods over which installation fees were and will be recognized as
revenue, effectively causing revenue to be decreased in periods prior to the
second quarter of 2013 and increased in later periods. The Company believes
potential adjustments, if any, would result in a change in revenues of less
than approximately 1% on a consolidated basis for any period covered under the
Company’s current Forms 10-K and 10-Q as well as on a prospective basis.
Additionally, if such a change were determined to be appropriate, it would
have no effect on the Company’s cash flows.

“Equinix delivered its 43rd quarter of revenue and adjusted EBITDA growth,
with healthy demand in our target markets as evidenced by the strong
interconnection growth, operating margins and firm MRR per cabinet globally,”
said Steve Smith, president and CEO of Equinix. “In addition, we had a number
of strategic wins in our cloud vertical, including a multi-site partnership
with Microsoft Azure, that leverages our unique global platform, network
density, and customer base to enable the hybrid-cloud deployments of the
future, further widening the moat around our business.”

Cost of revenues were $273.0 million for the third quarter, a 2% increase over
the previous quarter and a 9% increase over the same quarter last year. Cost
of revenues, excluding depreciation, amortization, accretion and stock-based
compensation of $98.2 million, which we refer to as cash cost of revenues,
were $174.8 million for the third quarter, a 3% increase from the previous
quarter and an 11% increase over the same quarter last year. Gross margins for
the quarter were 49%, unchanged from the previous quarter and the same quarter
last year. Cash gross margins, defined as gross profit before depreciation,
amortization, accretion and stock-based compensation, divided by revenues, for
the quarter were 68%, unchanged from the previous quarter and the same quarter
last year.

Selling, general and administrative expenses were $158.5 million for the third
quarter, a 7% increase over the previous quarter, primarily attributed to
professional fees related to the REIT conversion, and a 16% increase over the
same quarter last year. Selling, general and administrative expenses,
excluding depreciation, amortization and stock-based compensation of $38.0
million, which we refer to as cash selling, general and administrative
expenses, were $120.5 million for the third quarter, a 7% increase over the
previous quarter and an 18% increase over the same quarter last year.

Interest expense was $62.0 million for the third quarter, a 2% increase from
the previous quarter and a 23% increase over the same quarter last year,
primarily attributed to the $1.5 billion senior notes offering in March 2013
and additional capital leases and other financing obligations to support the
Company’s expansion projects. The Company recorded income tax expense of $11.7
million for the third quarter and income tax expense of $13.5 million in the
same quarter last year.

Net income attributable to Equinix for the third quarter was $36.6 million.
This represents a basic net income per share attributable to Equinix of $0.74
and a diluted net income per share attributable to Equinix of $0.72 based on a
weighted average share count of 49.6 million and 53.6 million, respectively,
for the third quarter of 2013.

Income from operations was $108.6 million for the third quarter, a 3% decrease
from the previous quarter and a 13% increase over the same quarter last year.
Adjusted EBITDA, defined as income or loss from operations before
depreciation, amortization, accretion, stock-based compensation, restructuring
charges and acquisition costs, for the third quarter was $245.2 million, a
slight increase over the previous quarter and a 7% increase over the same
quarter last year.

Capital expenditures, defined as gross capital expenditures less the net
change in accrued property, plant and equipment in the third quarter, were
$171.0 million, of which $130.0 million was attributed to expansion capital
expenditures and $41.0 million was attributed to ongoing capital expenditures.

The Company generated cash from operating activities of $206.6 million for the
third quarter as compared to $147.2 million in the previous quarter and $102.2
million for the same quarter last year. Cash used in investing activities was
$331.0 million in the third quarter as compared to cash provided by investing
activities of $537.5 million in the previous quarter, primarily attributed to
the$836.4 millionof restricted cash released for the redemption of
the$750.0 million8.125% senior notes, and cash used in investing activities
of $596.9 million for the same quarter last year, primarily attributed to the
Asia Tone and ancotel acquisitions. Cash used in financing activities was $1.2
million for the third quarter as compared to cash used in financing activities
of $850.0 million in the previous quarter, primarily attributed to the
redemption of the $750.0 million 8.125% senior notes, and cash provided by
financing activities of $73.7 million for the same quarter last year.

As of September 30, 2013, the Company’s cash, cash equivalents and investments
were $1,188.0 million, as compared to $1,216.9 million as of June 30, 2013.

Business Outlook

For the fourth quarter of 2013, the Company expects revenues to be in the
range of $559.0 to $563.0 million, which includes a positive foreign currency
benefit of approximately $8.0 million compared to the rates used from our
prior guidance. Cash gross margins are expected to approximate 68%. Cash
selling, general and administrative expenses are expected to range between
$123.0 and $128.0 million. Adjusted EBITDA is expected to range between $255.0
and $259.0 million, which includes $11.0 million in professional fees and
costs primarily related to the REIT conversion, and includes a positive
foreign currency benefit of approximately $3.0 million compared to the rates
used from our prior guidance. Capital expenditures are expected to be
approximately $190.0 to $210.0 million, comprised of approximately $50.0
million of ongoing capital expenditures and $140.0 to $160.0 million of
expansion capital expenditures.

For the full year of 2013, total revenues are expected to range between
$2,145.0 million to $2,149.0 million, or an as reported 13% year over year
growth rate. Full-year guidance is also adjusted for approximately $9.0
million of positive foreign currency benefit, when compared to the rates used
from our prior guidance. Total year cash gross margins are expected to
approximate 68%. Cash selling, general and administrative expenses are
expected to range between $470.0 and $475.0 million. Adjusted EBITDA for the
year is expected to range between $988.0 and $992.0 million, which includes
$25.0 million in professional fees primarily related to the REIT conversion,
and adjusting for approximately $4.0 million of positive currency benefit when
compared to the rates used from our prior guidance. Capital expenditures for
2013 are expected to be in the range of $560.0 to $580.0 million, comprised of
approximately $165.0 million of ongoing capital expenditures and $395.0 to
$415.0 million for expansion capital expenditures.

The U.S. dollar exchange rates used for Q4 2013 guidance have been updated to
$1.35 to the Euro, $1.60 to the Pound, S$1.24 to the U.S. dollar and R$2.18 to
the U.S. dollar. Updated Q4 global revenue breakdown by currency for the Euro,
Pound, Singapore dollar and Brazilian Real is 15%, 9%, 6% and 4%,
respectively.

Company Metrics and Q3 Results Presentation

The Company will discuss its results and guidance on its quarterly conference
call on Wednesday, October 23, 2013, at 5:30 p.m. ET (2:30 p.m. PT). A
simultaneous live Webcast of the call will be available on the Equinix
investors website located at www.equinix.com/investors. To hear the conference
call live, please dial 1-210-234-8004 (domestic and international) and
reference the passcode (EQIX). A presentation to accompany the call as well as
the Company’s Non-Financial Metrics tracking sheet, will also be available on
the website.

A replay of the call will be available beginning on Wednesday, October 23,
2013, at 7:30 p.m. (ET) through Friday, November 22, 2013, by dialing
1-203-369-0250 (domestic and international) and reference the passcode (2013).
In addition, the webcast will be available on the investors section of the
Company’s website over the same time period. No password is required for the
replay or the webcast.

About Equinix

Equinix, Inc. (Nasdaq: EQIX), connects more than 4,400 companies directly to
their customers and partners inside the world’s most networked data centers.
Today, businesses leverage the Equinix interconnection platform in 31
strategic markets across the Americas, EMEA and Asia-Pacific. www.equinix.com.

Non-GAAP Financial Measures

Equinix provides all information required in accordance with generally
accepted accounting principles (GAAP), but it believes that evaluating its
ongoing operating results may be difficult if limited to reviewing only GAAP
financial measures. Accordingly, Equinix uses non-GAAP financial measures,
such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash
operating expenses (also known as cash selling, general and administrative
expenses or cash SG&A), adjusted EBITDA margins, free cash flow, adjusted free
cash flow, discretionary free cash flow and adjusted discretionary free cash
flow to evaluate its operations. In presenting these non-GAAP financial
measures, Equinix excludes certain items that it believes are not good
indicators of the Company's current or future operating performance. These
items are depreciation, amortization, accretion of asset retirement
obligations and accrued restructuring charges, stock-based compensation,
restructuring charges, impairment charges and acquisition costs.Legislative
and regulatory requirements encourage use of and emphasis on GAAP financial
metrics and require companies to explain why non-GAAP financial metrics are
relevant to management and investors. Equinix excludes these items in order
for Equinix's lenders, investors, and industry analysts who review and report
on the Company, to better evaluate the Company's operating performance and
cash spending levels relative to its industry sector and competitors.

Equinix excludes depreciation expense as these charges primarily relate to the
initial construction costs of our IBX centers and do not reflect our current
or future cash spending levels to support our business. Our IBX centers are
long-lived assets, and have an economic life greater than 10 years. The
construction costs of our IBX centers do not recur and future capital
expenditures remain minor relative to our initial investment. This is a trend
we expect to continue. In addition, depreciation is also based on the
estimated useful lives of our IBX centers. These estimates could vary from
actual performance of the asset, are based on historic costs incurred to build
out our IBX centers, and are not indicative of current or expected future
capital expenditures. Therefore, Equinix excludes depreciation from its
operating results when evaluating its operations.

In addition, in presenting the non-GAAP financial measures, Equinix excludes
amortization expense related to certain intangible assets, as it represents a
cost that may not recur and is not a good indicator of the Company's current
or future operating performance. Equinix excludes accretion expense, both as
it relates to its asset retirement obligations as well as its accrued
restructuring charges, as these expenses represent costs which Equinix
believes are not meaningful in evaluating the Company's current operations.
Equinix excludes stock-based compensation expense as it primarily represents
expense attributed to equity awards that have no current or future cash
obligations. As such, we, and many investors and analysts, exclude this
stock-based compensation expense when assessing the cash generating
performance of our operations. Equinix excludes restructuring charges from its
non-GAAP financial measures. The restructuring charges relate to the Company's
decision to exit leases for excess space adjacent to several of our IBX
centers, which we did not intend to build out, or our decision to reverse such
restructuring charges or severance charges related to the Switch and Data
acquisition. Equinix also excludes impairment charges related to certain
long-lived assets. The impairment charges are related to expense recognized
whenever events or changes in circumstances indicate that the carrying amount
of long-lived assets are not recoverable. Finally, Equinix excludes
acquisition costs from its non-GAAP financial measures. The acquisition costs
relate to costs the Company incurs in connection with business combinations.
Management believes such items as restructuring charges, impairment charges
and acquisition costs are non-core transactions; however, these types of costs
will or may occur in future periods.

Our management does not itself, nor does it suggest that investors should,
consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP.
However, we have presented such non-GAAP financial measures to provide
investors with an additional tool to evaluate our operating results in a
manner that focuses on what management believes to be our core, ongoing
business operations. Management believes that the inclusion of these non-GAAP
financial measures provides consistency and comparability with past reports
and provides a better understanding of the overall performance of the business
and its ability to perform in subsequent periods. Equinix believes that if it
did not provide such non-GAAP financial information, investors would not have
all the necessary data to analyze Equinix effectively.

Investors should note, however, that the non-GAAP financial measures used by
Equinix may not be the same non-GAAP financial measures, and may not be
calculated in the same manner, as that of other companies. In addition,
whenever Equinix uses such non-GAAP financial measures, it provides a
reconciliation of non-GAAP financial measures to the most closely applicable
GAAP financial measure. Investors are encouraged to review the related GAAP
financial measures and the reconciliation of these non-GAAP financial measures
to their most directly comparable GAAP financial measure.

Equinix does not provide forward-looking guidance for certain financial data,
such as depreciation, amortization, accretion, stock-based compensation, net
income (loss) from operations, cash generated from operating activities and
cash used in investing activities, and as a result, is not able to provide a
reconciliation of GAAP to non-GAAP financial measures for forward-looking
data. Equinix intends to calculate the various non-GAAP financial measures in
future periods consistent with how they were calculated for the periods
presented within this press release.

Forward Looking Statements

This press release contains forward-looking statements that involve risks and
uncertainties. Actual results may differ materially from expectations
discussed in such forward-looking statements. Factors that might cause such
differences include, but are not limited to, the challenges of acquiring,
operating and constructing IBX centers and developing, deploying and
delivering Equinix services; unanticipated costs or difficulties relating to
the integration of companies we have acquired or will acquire into Equinix; a
failure to receive significant revenue from customers in recently built out or
acquired data centers; failure to complete any financing arrangements
contemplated from time to time; competition from existing and new competitors;
the ability to generate sufficient cash flow or otherwise obtain funds to
repay new or outstanding indebtedness; the loss or decline in business from
our key customers; and other risks described from time to time in Equinix's
filings with the Securities and Exchange Commission. In particular, see
Equinix's recent quarterly and annual reports filed with the Securities and
Exchange Commission, copies of which are available upon request from Equinix.
Equinix does not assume any obligation to update the forward-looking
information contained in this press release.

Equinix and IBX are registered trademarks of Equinix, Inc. International
Business Exchange is a trademark of Equinix, Inc.

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                                                            
                                                                                   
                        Three Months Ended                         Nine Months Ended
                        September     June 30,       September     September 30,   September 30,
                        30,                          30,
                        2013          2013           2012          2013            2012
                                                                                   
Recurring revenues      $ 517,049     $ 502,470      $ 462,829     $ 1,514,790     $ 1,317,505
Non-recurring            23,474      23,199       25,901      70,857        71,719    
revenues
      Revenues            540,523       525,669        488,730       1,585,647       1,389,224
                                                                                   
Cost of revenues         273,012     267,693      251,487     799,973       693,874   
      Gross profit       267,511     257,976      237,243     785,674       695,350   
                                                                                   
Operating expenses:
      Sales and           61,619        59,478         53,211        179,373         147,224
      marketing
      General and         96,874        88,632         83,621        275,191         242,532
      administrative
      Restructuring       -             (4,837   )     -             (4,837    )     -
      charges
      Acquisition        438         2,526        4,542       6,626         6,883     
      costs
      Total operating    158,931     145,799      141,374     456,353       396,639   
      expenses
                                                                                   
Income from              108,580     112,177      95,869      329,321       298,711   
operations
                                                                                   
Interest and other
income (expense):
      Interest income     929           917            1,054         2,593           2,708
      Interest            (61,957 )     (61,001  )     (50,207 )     (183,289  )     (149,812  )
      expense
      Loss on debt        -             (93,602  )     (5,204  )     (93,602   )     (5,204    )
      extinguishment
      Other income       985         2,768        507         3,294         (1,491    )
      (expense)
      Total interest     (60,043 )    (150,918 )    (53,850 )    (271,004  )    (153,799  )
      and other, net
                                                                                   
Income (loss) from
continuing operations     48,537        (38,741  )     42,019        58,317          144,912
before income taxes
                                                                                   
      Income tax
      benefit            (11,680 )    10,612       (13,498 )    (13,266   )    (44,489   )
      (expense)
                                                                                   
Net income (loss)
from continuing           36,857        (28,129  )     28,521        45,051          100,423
operations
                                                                                   
      Net income from
      discontinued       -           -            679         -             1,228     
      operations, net
      of tax
                                                                                   
Net income (loss)         36,857        (28,129  )     29,200        45,051          101,651
                                                                                   
Net income
attributable to
redeemable                (281    )     (529     )     (362    )     (1,251    )     (1,843    )
non-controlling
interests
                                                                               
Net income (loss)
attributable to         $ 36,576     $ (28,658  )   $ 28,838     $ 43,800       $ 99,808    
Equinix
                                                                                   
Net income (loss) per
share attributable to
Equinix:
                                                                                   
      Basic net
      income (loss)
      per share from    $ 0.74        $ (0.58    )   $ 0.58        $ 0.89          $ 2.06
      continuing
      operations
      Basic net
      income per
      share from         -           -            0.02        -             0.03      
      discontinued
      operations
      Basic net
      income (loss)     $ 0.74       $ (0.58    )   $ 0.60       $ 0.89         $ 2.09      
      per share (1)
                                                                                   
      Diluted net
      income (loss)
      per share from    $ 0.72        $ (0.58    )   $ 0.57        $ 0.88          $ 2.01
      continuing
      operations
      Diluted net
      income per
      share from         -           -            0.01        -             0.02      
      discontinued
      operations
      Diluted net
      income (loss)     $ 0.72       $ (0.58    )   $ 0.58       $ 0.88         $ 2.03      
      per share (2)
                                                                                   
      Shares used in
      computing basic
      net income         49,555      49,379       48,361      49,325        47,779    
      (loss) per
      share
                                                                                   
      Shares used in
      computing
      diluted net        53,581      49,379       52,655      50,050        51,724    
      income (loss)
      per share
    
                                                                                   
(1)   The net income (loss) used in the computation of basic net income per share attributable
      to Equinix is presented below:
                                                                                   
      Net income
      (loss) from       $ 36,857      $ (28,129  )   $ 28,521      $ 45,051        $ 100,423
      continuing
      operations
      Net income
      attributable to    (281    )    (529     )    (362    )    (1,251    )    (1,843    )
      non-controlling
      interests
      Net income
      (loss) from
      continuing          36,576        (28,658  )     28,159        43,800          98,580
      operations
      attributable to
      Equinix, basic
      Net income from
      discontinued       -           -            679         -             1,228     
      operations
      Net income
      (loss)            $ 36,576     $ (28,658  )   $ 28,838     $ 43,800       $ 99,808    
      attributable to
      Equinix, basic
                                                                                   
(2)   The net income (loss) used in the computation of diluted net income per share attributable
      to Equinix is presented below:
                                                                                   
      Net income
      (loss) from
      continuing        $ 36,576      $ (28,658  )   $ 28,159      $ 43,800        $ 98,580
      operations
      attributable to
      Equinix, basic
      Interest on
      convertible        1,865       -            1,696       -             5,073     
      debt
      Net income
      (loss) from
      continuing
      operations          38,441        (28,658  )     29,855        43,800          103,653
      attributable to
      Equinix,
      diluted
      Net income from
      discontinued       -           -            679         -             1,228     
      operations
      Net income
      (loss)
      attributable to   $ 38,441     $ (28,658  )   $ 30,534     $ 43,800       $ 104,881   
      Equinix,
      diluted
                                                                                               

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
                                                                   
                                                                         
                  Three Months Ended                       Nine Months Ended
                  September     June 30,      September    September     September
                  30,                         30,          30,           30,
                  2013          2013          2012         2013          2012
                                                                         
Net income        $ 36,857     $ (28,129 )   $ 29,200    $ 45,051     $ 101,651 
(loss)
                                                                         
Other
comprehensive
income (loss),
net of tax:
Foreign
currency            78,113        (30,666 )     41,782       (25,107 )     26,887
translation
gain (loss)
Unrealized gain
(loss) on          438         (458    )    113        78          14      
available for
sale securities
Other
comprehensive      78,551      (31,124 )    41,895     (25,029 )    26,901  
loss, net of
tax:
                                                                         
Comprehensive
income (loss),     115,408     (59,253 )    71,095     20,022      128,552 
net of tax
                                                                         
Net income
attributable to
redeemable          (281    )     (529    )     (362   )     (1,251  )     (1,843  )
non-controlling
interests
Other
comprehensive
income (loss)
attributable to    (200    )    5,309       240        4,340       3,155   
redeemable
non-controlling
interests
                                                                         
Comprehensive
income (loss)
attributable to   $ 114,927    $ (54,473 )   $ 70,973    $ 23,111     $ 129,864 
Equinix, net of
tax
                                                                                   

EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                                                              
Assets                                           September 30,   December 31,
                                                 2013            2012
                                                                 
Cash and cash equivalents                        $ 399,742       $ 252,213
Short-term investments                             346,038         166,492
Accounts receivable, net                           200,480         163,840
Other current assets                              59,008        57,206    
Total current assets                               1,005,268       639,751
Long-term investments                              442,195         127,819
Property, plant and equipment, net                 4,381,020       3,918,999
Goodwill                                           1,036,179       1,042,564
Intangible assets, net                             182,345         201,562
Other assets                                      337,702       202,269   
Total assets                                     $ 7,384,709    $ 6,132,964 
                                                                 
Liabilities and Stockholders' Equity
                                                                 
Accounts payable and accrued expenses            $ 299,135       $ 268,853
Accrued property and equipment                     91,468          63,509
Current portion of capital lease and other         16,979          15,206
financing obligations
Current portion of loans payable                   40,185          52,160
Other current liabilities                         123,022       139,561   
Total current liabilities                          570,789         539,289
Capital lease and other financing obligations,     862,410         545,853
less current portion
Loans payable, less current portion                156,787         188,802
Senior notes                                       2,250,000       1,500,000
Convertible debt                                   720,215         708,726
Other liabilities                                 255,452       230,843   
Total liabilities                                 4,815,653     3,713,513 
                                                                 
Redeemable non-controlling interests              101,059       84,178    
                                                                 
Common stock                                       50              49
Additional paid-in capital                         2,692,210       2,583,371
Treasury stock                                     (35,903   )     (36,676   )
Accumulated other comprehensive loss               (121,731  )     (101,042  )
Accumulated deficit                               (66,629   )    (110,429  )
Total stockholders' equity                        2,467,997     2,335,273 
                                                                 
Total liabilities, redeemable non-controlling    $ 7,384,709    $ 6,132,964 
interests and stockholders' equity
                                                                 
                                                              
                                                                 
Ending headcount by geographic region is as
follows:
                                                                 
Americas headcount                                 1,976           1,821
EMEA headcount                                     898             811
Asia-Pacific headcount                            612           521       
Total headcount                                   3,486         3,153     
                                                                             

EQUINIX, INC.
SUMMARY OF DEBT OUTSTANDING
(in thousands)
(unaudited)
                                                             
                                                September 30,   December 31,
                                                2013            2012
                                                                
Capital lease and other financing obligations   $  879,389      $  561,059
                                                                
U.S. term loan                                     150,000         180,000
ALOG financing                                     46,792          48,807
Paris 4 IBX financing                              115             8,071
Other loans payable                               65             4,084
Total loans payable                               196,972        240,962
                                                                
Senior notes                                      2,250,000      1,500,000
                                                                
Convertible debt, net of debt discount             720,215         708,726
Plus debt discount                                49,495         60,990
Total convertible debt principal                  769,710        769,716
                                                                
Total debt outstanding                          $  4,096,071    $  3,071,737
                                                                   

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                                             
                                                                                    
                       Three Months Ended                           Nine Months Ended
                       September      June 30,       September      September 30,   September
                       30,                           30,                            30,
                       2013           2013           2012           2013            2012
                                                                                    
Cash flows from
operating
activities:
      Net income       $ 36,857       $ (28,129  )   $ 29,200       $ 45,051        $ 101,651
      (loss)
      Adjustments to
      reconcile net
      income (loss)
      to net cash
      provided by
      operating
      activities:
      Depreciation,
      amortization       108,940        110,117        107,623        327,588         298,489
      and accretion
      Stock-based        27,280         24,194         22,582         74,177          62,234
      compensation
      Debt issuance
      costs and debt     5,965          5,884          5,048          17,602          18,057
      discount
      Loss on debt       -              93,602         5,204          93,602          5,204
      extinguishment
      Restructuring      -              (4,837   )     -              (4,837    )     -
      charges
      Excess tax
      benefits from      (4,951   )     (3,431   )     (53,174  )     (27,372   )     (53,174  )
      employee
      equity awards
      Other
      reconciling        5,498          3,949          2,205          12,532          6,046
      items
      Changes in
      operating
      assets and
      liabilities:
      Accounts           2,633          (19,098  )     (12,359  )     (41,128   )     (46,900  )
      receivable
      Income taxes,      3,271          (74,153  )     1,375          (72,491   )     24,597
      net
      Accounts
      payable and        17,003         28,392         14,966         17,399          5,079
      accrued
      expenses
      Other assets
      and               4,066        10,669       (20,518  )    (4,221    )    1,644    
      liabilities
      Net cash
      provided by       206,562      147,159      102,152      437,902       422,927  
      operating
      activities
Cash flows from
investing
activities:
      Purchases,
      sales and
      maturities of      (89,219  )     (175,593 )     (111,574 )     (497,777  )     514,413
      investments,
      net
      Purchase of
      New York IBX       (70,481  )     (2,960   )     -              (73,441   )     -
      data center
      Purchase of
      Asia Tone,         862            -              (188,798 )     755             (188,798 )
      less cash
      acquired
      Purchase of
      ancotel, less      -              -              (84,236  )     -               (84,236  )
      cash acquired
      Purchases of       (2,244   )     -              -              (2,244    )     -
      real estate
      Purchases of
      other
      property,          (171,035 )     (122,863 )     (212,118 )     (369,565  )     (554,092 )
      plant and
      equipment
      Other
      investing         1,159        838,963      (133     )    6,321         79,167   
      activities
      Net cash
      provided by
      (used in)         (330,958 )    537,547      (596,859 )    (935,951  )    (233,546 )
      investing
      activities
Cash flows from
financing
activities:
      Purchases of       -              -              -              -               (13,364  )
      treasury stock
      Proceeds from
      employee           12,202         1,512          13,666         28,082          50,139
      equity awards
      Proceeds from      1,734          -              249,633        1,734           258,542
      loans payable
      Proceeds from      -              -              -              1,500,000       -
      senior notes
      Repayment of
      capital lease
      and other          (4,553   )     (4,157   )     (3,049   )     (12,226   )     (8,907   )
      financing
      obligations
      Repayment of       (10,113  )     (18,139  )     (238,480 )     (42,304   )     (315,779 )
      loans payable
      Repayment of       -              (750,000 )     -              (750,000  )     -
      senior notes
      Repayment of
      convertible        -              -              -              -               (250,007 )
      debt
      Debt
      extinguishment     (3,750   )     (80,925  )     -              (84,675   )     -
      costs
      Excess tax
      benefits from      4,951          3,431          53,174         27,372          53,174
      employee
      equity awards
      Other
      financing         (1,649   )    (1,756   )    (1,247   )    (22,435   )    (8,767   )
      activities
      Net cash
      provided by
      (used in)         (1,178   )    (850,034 )    73,697       645,548       (234,969 )
      financing
      activities
Effect of foreign
currency exchange       7,820        (2,195   )    6,601        30            6,452    
rates on cash and
cash equivalents
Net increase
(decrease) in cash       (117,754 )     (167,523 )     (414,409 )     147,529         (39,136  )
and cash equivalents
Cash and cash
equivalents at          517,496      685,019      654,096      252,213       278,823  
beginning of period
Cash and cash
equivalents at end     $ 399,742     $ 517,496     $ 239,687     $ 399,742      $ 239,687  
of period
                                                                                    
      Supplemental
      cash flow
      information:
      Cash paid for    $ 9,882       $ 62,818      $ 12,813      $ 86,736       $ 19,578   
      taxes
      Cash paid for    $ 38,319      $ 29,664      $ 65,616      $ 135,958      $ 157,917  
      interest
                                                                                    
Free cash flow (1)     $ (35,177  )   $ 860,299     $ (383,133 )   $ (272      )   $ (325,032 )
                                                                                    
Adjusted free cash     $ 50,855      $ 923,876     $ (56,925  )   $ 174,225      $ 1,176    
flow (2)
                                                                                    
Ongoing capital        $ 41,064      $ 40,210      $ 37,593      $ 115,271      $ 113,592  
expenditures (3)
                                                                                    
Discretionary free     $ 165,498     $ 106,949     $ 64,559      $ 322,631      $ 309,335  
cash flow (4)
                                                                                    
Adjusted
discretionary free     $ 179,667     $ 167,566     $ 117,733     $ 422,198      $ 362,509  
cash flow (5)
    
                                                                                    
      We define free cash flow as net cash provided by operating activities plus net cash
(1)   provided by (used in) investing activities (excluding the net purchases, sales and
      maturities of investments) as presented below:
                                                                                    
      Net cash
      provided by
      operating        $ 206,562      $ 147,159      $ 102,152      $ 437,902       $ 422,927
      activities as
      presented
      above
      Net cash
      provided by
      (used in)
      investing          (330,958 )     537,547        (596,859 )     (935,951  )     (233,546 )
      activities as
      presented
      above
      Purchases,
      sales and
      maturities of     89,219       175,593      111,574      497,777       (514,413 )
      investments,
      net
      Free cash flow
      (negative free   $ (35,177  )   $ 860,299     $ (383,133 )   $ (272      )   $ (325,032 )
      cash flow)
                                                                                    
      We define adjusted free cash flow as free cash flow (as defined above) excluding any
      purchases of real estate, acquisitions, sales of discontinued operations, any excess tax
(2)   benefits from employee equity awards, cash paid for taxes associated with reclassifying
      our assets for tax purposes triggered by our planned conversion into a real estate
      investment trust ("REIT") and costs related to the planned REIT conversion, as presented
      below:
                                                                                    
      Free cash flow
      (as defined      $ (35,177  )   $ 860,299      $ (383,133 )   $ (272      )   $ (325,032 )
      above)
      Less purchase
      of New York        70,481         2,960          -              73,441          -
      IBX data
      center
      Less purchase
      of Asia Tone,      (862     )     -              188,798        (755      )     188,798
      less cash
      acquired
      Less purchase
      of ancotel,        -              -              84,236         -               84,236
      less cash
      acquired
      Less purchases     2,244          -              -              2,244           -
      of real estate
      Less excess
      tax benefits       4,951          3,431          53,174         27,372          53,174
      from employee
      equity awards
      Less cash paid
      for taxes
      resulting from     805            53,570         -              58,109          -
      the planned
      REIT
      conversion
      Less costs
      related to the    8,413        3,616        -            14,086        -        
      planned REIT
      conversion
      Adjusted free
      cash flow
      (negative        $ 50,855      $ 923,876     $ (56,925  )   $ 174,225      $ 1,176    
      adjusted free
      cash flow)
                                                                                    
      We categorize our cash paid for taxes into cash paid for taxes resulting from the planned
      REIT conversion (as defined above) and other cash taxes paid.
                                                                                    
      Cash paid for
      taxes
      resulting from   $ 805          $ 53,570       $ -            $ 58,109        $ -
      the planned
      REIT
      conversion
      Other cash        9,077        9,248        12,813       28,627        19,578   
      taxes paid
      Total cash       $ 9,882       $ 62,818      $ 12,813      $ 86,736       $ 19,578   
      paid for taxes
                                                                                    
      We refer to our purchases of other property, plant and equipment as our capital
(3)   expenditures (or capex). We categorize our capital expenditures into expansion and ongoing
      capex. Expansion capex is capex spent to build out our new data centers and data center
      expansions. Our ongoing capex represents all of our other capex spending.
                                                                                    
      Ongoing
      capital          $ 41,064       $ 40,210       $ 37,593       $ 115,271       $ 113,592
      expenditures
      Expansion
      capital           129,971      82,653       174,525      254,294       440,500  
      expenditures
      Total capital    $ 171,035     $ 122,863     $ 212,118     $ 369,565      $ 554,092  
      expenditures
                                                                                    
(4)   We define discretionary free cash flow as net cash provided by operating activities less
      ongoing capital expenditures (as described above), as presented below:
                                                                                    
      Net cash
      provided by
      operating        $ 206,562      $ 147,159      $ 102,152      $ 437,902       $ 422,927
      activities, as
      presented
      above
      Less ongoing
      capital           (41,064  )    (40,210  )    (37,593  )    (115,271  )    (113,592 )
      expenditures
      Discretionary    $ 165,498     $ 106,949     $ 64,559      $ 322,631      $ 309,335  
      free cash flow
                                                                                    
      We define adjusted discretionary free cash flow as discretionary free cash flow (as
      defined above), excluding any excess tax benefits from employee equity awards, cash paid
(5)   for taxes associated with reclassifying our assets for tax purposes triggered by our
      planned REIT conversion and costs related to the planned REIT conversion, as presented
      below:
                                                                                    
      Discretionary    $ 165,498      $ 106,949      $ 64,559       $ 322,631       $ 309,335
      free cash flow
      Excess tax
      benefits from      4,951          3,431          53,174         27,372          53,174
      employee
      equity awards
      Cash paid for
      taxes
      resulting from     805            53,570         -              58,109          -
      the planned
      REIT
      conversion
      Costs related
      to the planned    8,413        3,616        -            14,086        -        
      REIT
      conversion
      Adjusted
      discretionary    $ 179,667     $ 167,566     $ 117,733     $ 422,198      $ 362,509  
      free cash flow
                                                                                    

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION
(in thousands)
(unaudited)
                                                                                
                                                                                       
                         Three Months Ended                           Nine Months Ended
                         September      June 30,       September      September 30,    September 30,
                         30,                           30,
                         2013           2013           2012           2013             2012
                                                                                       
Recurring revenues       $ 517,049      $ 502,470      $ 462,829      $ 1,514,790      $ 1,317,505
Non-recurring revenues    23,474       23,199       25,901       70,857         71,719     
       Revenues (1)       540,523      525,669      488,730      1,585,647      1,389,224  
                                                                                       
Cash cost of revenues     174,758      169,077      158,038      506,594        436,410    
(2)
       Cash gross         365,765      356,592      330,692      1,079,053      952,814    
       profit (3)
                                                                                       
Cash operating
expenses (4):
       Cash sales and
       marketing           48,172         46,430         42,120         140,882          118,928
       expenses (5)
       Cash general
       and                72,355       65,985       60,274       205,296        177,512    
       administrative
       expenses (6)
       Total cash
       operating          120,527      112,415      102,394      346,178        296,440    
       expenses (7)
                                                                                       
Adjusted EBITDA (8)      $ 245,238     $ 244,177     $ 228,298     $ 732,875       $ 656,374    
                                                                                       
Cash gross margins (9)    68       %    68       %    68       %    68         %    69         %
                                                                                       
Adjusted EBITDA           45       %    46       %    47       %    46         %    47         %
margins (10)
                                                                                       
Adjusted EBITDA           7        %    12       %    34       %    36         %    57         %
flow-through rate (11)
     
                                                                                       
(1)    The geographic split of our revenues on a services basis is presented below:
                                                                                       
       Americas
       Revenues:
                                                                                       
       Colocation        $ 230,827      $ 226,536      $ 213,011      $ 680,928        $ 626,685
       Interconnection     61,984         59,800         54,943         179,990          159,730
       Managed             13,307         13,977         12,424         40,900           38,924
       infrastructure
       Rental             818          445          469          1,723          1,353      
       Recurring           306,936        300,758        280,847        903,541          826,692
       revenues
       Non-recurring      11,213       11,685       13,034       35,605         34,439     
       revenues
       Revenues           318,149      312,443      293,881      939,146        861,131    
                                                                                       
       EMEA Revenues:
                                                                                       
       Colocation          109,742        103,916        91,512         314,190          263,283
       Interconnection     9,234          8,854          7,188          26,469           15,204
       Managed             6,216          5,734          5,112          16,199           11,788
       infrastructure
       Rental             116          138          314          374            994        
       Recurring           125,308        118,642        104,126        357,232          291,269
       revenues
       Non-recurring      7,596        6,970        7,832        21,578         24,722     
       revenues
       Revenues           132,904      125,612      111,958      378,810        315,991    
                                                                                       
       Asia-Pacific
       Revenues:
                                                                                       
       Colocation          69,080         67,881         63,204         207,975          159,972
       Interconnection     10,433         9,699          8,550          29,536           23,664
       Managed            5,292        5,490        6,102        16,506         15,908     
       infrastructure
       Recurring           84,805         83,070         77,856         254,017          199,544
       revenues
       Non-recurring      4,665        4,544        5,035        13,674         12,558     
       revenues
       Revenues           89,470       87,614       82,891       267,691        212,102    
                                                                                       
       Worldwide
       Revenues:
                                                                                       
       Colocation          409,649        398,333        367,727        1,203,093        1,049,940
       Interconnection     81,651         78,353         70,681         235,995          198,598
       Managed             24,815         25,201         23,638         73,605           66,620
       infrastructure
       Rental             934          583          783          2,097          2,347      
       Recurring           517,049        502,470        462,829        1,514,790        1,317,505
       revenues
       Non-recurring      23,474       23,199       25,901       70,857         71,719     
       revenues
       Revenues          $ 540,523     $ 525,669     $ 488,730     $ 1,585,647     $ 1,389,224  
                                                                                       
(2)    We define cash cost of revenues as cost of revenues less depreciation, amortization, accretion
       and stock-based compensation as presented below:
                                                                                       
       Cost of           $ 273,012      $ 267,693      $ 251,487      $ 799,973        $ 693,874
       revenues
       Depreciation,
       amortization        (95,984  )     (96,822  )     (91,723  )     (287,713   )     (252,887   )
       and accretion
       expense
       Stock-based
       compensation       (2,270   )    (1,794   )    (1,726   )    (5,666     )    (4,577     )
       expense
       Cash cost of      $ 174,758     $ 169,077     $ 158,038     $ 506,594       $ 436,410    
       revenues
                                                                                       
       The geographic split of our cash cost of revenues is presented below:
                                                                                       
       Americas cash
       cost of           $ 93,529       $ 90,546       $ 85,384       $ 272,548        $ 245,931
       revenues
       EMEA cash cost      47,925         47,304         42,615         138,858          115,360
       of revenues
       Asia-Pacific
       cash cost of       33,304       31,227       30,039       95,188         75,119     
       revenues
       Cash cost of      $ 174,758     $ 169,077     $ 158,038     $ 506,594       $ 436,410    
       revenues
                                                                                       
(3)    We define cash gross profit as revenues less cash cost of revenues (as defined above).
                                                                                       
       We define cash operating expenses as operating expenses less depreciation, amortization,
(4)    stock-based compensation, restructuring charges and acquisition costs. We also refer to cash
       operating expenses as cash selling, general and administrative expenses or "cash SG&A".
                                                                                       
(5)    We define cash sales and marketing expenses as sales and marketing expenses less depreciation,
       amortization and stock-based compensation as presented below:
                                                                                       
       Sales and
       marketing         $ 61,619       $ 59,478       $ 53,211       $ 179,373        $ 147,224
       expenses
       Depreciation
       and                 (6,197   )     (6,223   )     (6,296   )     (18,695    )     (14,791    )
       amortization
       expense
       Stock-based
       compensation       (7,250   )    (6,825   )    (4,795   )    (19,796    )    (13,505    )
       expense
       Cash sales and
       marketing         $ 48,172      $ 46,430      $ 42,120      $ 140,882       $ 118,928    
       expenses
                                                                                       
(6)    We define cash general and administrative expenses as general and administrative expenses less
       depreciation, amortization and stock-based compensation as presented below:
                                                                                       
       General and
       administrative    $ 96,874       $ 88,632       $ 83,621       $ 275,191        $ 242,532
       expenses
       Depreciation
       and                 (6,759   )     (7,072   )     (7,431   )     (21,180    )     (21,196    )
       amortization
       expense
       Stock-based
       compensation       (17,760  )    (15,575  )    (15,916  )    (48,715    )    (43,824    )
       expense
       Cash general
       and               $ 72,355      $ 65,985      $ 60,274      $ 205,296       $ 177,512    
       administrative
       expenses
                                                                                       
(7)    Our cash operating expenses, or cash SG&A, as defined above, is presented below:
                                                                                       
       Cash sales and
       marketing         $ 48,172       $ 46,430       $ 42,120       $ 140,882        $ 118,928
       expenses
       Cash general
       and                72,355       65,985       60,274       205,296        177,512    
       administrative
       expenses
       Cash SG&A         $ 120,527     $ 112,415     $ 102,394     $ 346,178       $ 296,440    
                                                                                       
       The geographic split of our cash operating expenses, or cash SG&A, is presented below:
                                                                                       
       Americas cash     $ 76,226       $ 69,287       $ 67,136       $ 219,064        $ 199,759
       SG&A
       EMEA cash SG&A      28,191         29,016         22,818         84,818           62,017
       Asia-Pacific       16,110       14,112       12,440       42,296         34,664     
       cash SG&A
       Cash SG&A         $ 120,527     $ 112,415     $ 102,394     $ 346,178       $ 296,440    
                                                                                       
       We define adjusted EBITDA as income from continuing operations plus depreciation,
(8)    amortization, accretion, stock-based compensation expense, restructuring charges and
       acquisition costs as presented below:
                                                                                       
       Income from
       continuing        $ 108,580      $ 112,177      $ 95,869       $ 329,321        $ 298,711
       operations
       Depreciation,
       amortization        108,940        110,117        105,450        327,588          288,874
       and accretion
       expense
       Stock-based
       compensation        27,280         24,194         22,437         74,177           61,906
       expense
       Restructuring       -              (4,837   )     -              (4,837     )     -
       charges
       Acquisition        438          2,526        4,542        6,626          6,883      
       costs
       Adjusted EBITDA   $ 245,238     $ 244,177     $ 228,298     $ 732,875       $ 656,374    
                                                                                       
       The geographic split of our adjusted EBITDA is presented below:
                                                                                       
       Americas income
       from continuing   $ 65,375       $ 72,064       $ 63,740       $ 200,036        $ 191,978
       operations
       Americas
       depreciation,
       amortization        62,345         65,077         60,322         190,646          175,630
       and accretion
       expense
       Americas
       stock-based         20,591         18,168         17,299         56,070           47,924
       compensation
       expense
       Americas
       restructuring       -              (4,837   )     -              (4,837     )     -
       charges
       Americas
       acquisition        83           2,138        -            5,619          (91        )
       costs
       Americas           148,394      152,610      141,361      447,534        415,441    
       adjusted EBITDA
                                                                                       
       EMEA income
       from continuing     28,334         22,414         20,565         73,611           70,806
       operations
       EMEA
       depreciation,
       amortization        24,503         23,424         22,054         70,998           57,695
       and accretion
       expense
       EMEA
       stock-based         3,596          3,065          2,900          9,699            7,737
       compensation
       expense
       EMEA
       acquisition        355          389          1,006        826            2,376      
       costs
       EMEA adjusted      56,788       49,292       46,525       155,134        138,614    
       EBITDA
                                                                                       
       Asia-Pacific
       income from         14,871         17,699         11,564         55,674           35,927
       continuing
       operations
       Asia-Pacific
       depreciation,
       amortization        22,092         21,616         23,074         65,944           55,549
       and accretion
       expense
       Asia-Pacific
       stock-based         3,093          2,961          2,238          8,408            6,245
       compensation
       expense
       Asia-Pacific
       acquisition        -            (1       )    3,536        181            4,598      
       costs
       Asia-Pacific       40,056       42,275       40,412       130,207        102,319    
       adjusted EBITDA
                                                                                       
       Adjusted EBITDA   $ 245,238     $ 244,177     $ 228,298     $ 732,875       $ 656,374    
                                                                                       
(9)    We define cash gross margins as cash gross profit divided by revenues.
                                                                                       
       Our cash gross margins by geographic region is presented below:
                                                                                       
       Americas cash      71       %    71       %    71       %    71         %    71         %
       gross margins
                                                                                       
       EMEA cash gross    64       %    62       %    62       %    63         %    63         %
       margins
                                                                                       
       Asia-Pacific
       cash gross         63       %    64       %    64       %    64         %    65         %
       margins
                                                                                       
(10)   We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
                                                                                       
       Americas
       adjusted EBITDA    47       %    49       %    48       %    48         %    48         %
       margins
                                                                                       
       EMEA adjusted      43       %    39       %    42       %    41         %    44         %
       EBITDA margins
                                                                                       
       Asia-Pacific
       adjusted EBITDA    45       %    48       %    49       %    49         %    48         %
       margins
                                                                                       
(11)   We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by
       incremental revenue growth as follows:
                                                                                       
       Adjusted EBITDA
       - current         $ 245,238      $ 244,177      $ 228,298      $ 732,875        $ 656,374
       period
       Less adjusted
       EBITDA - prior     (244,177 )    (243,460 )    (217,480 )    (685,061   )    (558,044   )
       period
       Adjusted EBITDA   $ 1,061       $ 717         $ 10,818      $ 47,814        $ 98,330     
       growth
                                                                                       
       Revenues -        $ 540,523      $ 525,669      $ 488,730      $ 1,585,647      $ 1,389,224
       current period
       Less revenues -    (525,669 )    (519,455 )    (457,249 )    (1,452,499 )    (1,215,835 )
       prior period
       Revenue growth    $ 14,854      $ 6,214       $ 31,481      $ 133,148       $ 173,389    
                                                                                       
       Adjusted EBITDA
       flow-through       7        %    12       %    34       %    36         %    57         %
       rate

Contact:

Equinix Investor Relations Contacts:
Equinix, Inc.
Katrina Rymill, 650-598-6583
krymill@equinix.com
Samir Patodia, 650-598-6587
spatodia@equinix.com
or
Equinix Media Contacts:
Equinix, Inc.
Melissa Neumann, 650-598-6098
mneumann@equinix.com
Liam Rose, 650-598-6590
lrose@equinix.com
 
Press spacebar to pause and continue. Press esc to stop.