Equinix, Inc. today announced it expects 2010 third quarter and
full year revenues will be below the Company’s previous outlook,
and it expects 2010 third quarter and full year adjusted EBITDA
will be above the Company’s previous outlook, both provided on July
28, 2010.
Equinix now expects third quarter revenues to be in the range of
$328.0 to $330.0 million, the midpoint of which is 2.2 percent
lower than the midpoint of its previous outlook, and total revenues
for the full year to be approximately $1,215.0 million, which is
1.2 percent lower than the midpoint of its previous outlook. This
updated guidance is due to underestimated churn assumptions in
Equinix’s forecast models in North America, greater than expected
discounting to secure longer term contract renewals and lower than
expected revenues attributable to the Switch and Data business
acquired in April 2010.
For third quarter 2010, Equinix is increasing its adjusted
EBITDA outlook to greater than $140.0 million. For the full year of
2010, the adjusted EBITDA outlook is also being increased to
approximately $540.0 million. This increase in expectations is due
in part to better than expected gross margins and lower than
expected cash selling, general and administrative expenses.
Equinix will host a conference call to discuss this today,
Tuesday, October 5, 2010, at 4:30 p.m. EDT (1:30 p.m. PDT). To hear
the conference call live, please dial 1-210-234-8004 (domestic and
international) and reference the passcode (EQIX). A simultaneous
live Webcast of the call will also be available at
www.equinix.com/investors.
A replay of the call will be available beginning on Tuesday,
October 5, 2010 at 6:30 p.m. (EDT) through October 26, 2010 by
dialing 1-203-369-0463 and referencing the passcode (2010). In
addition, the webcast will be available on the Company’s website at
www.equinix.com/investors. No password is required for the
webcast.
Equinix will provide full third quarter results during its
regularly scheduled earnings call on October 26, 2010.
About Equinix
Equinix, Inc. (Nasdaq: EQIX) provides global data center
services that ensure the vitality of the information-driven world.
Global enterprises, cloud, content and financial companies, and
more than 595 network service providers rely upon Equinix to
protect and connect their most valued information assets. Equinix
operates 90 International Business Exchange™ (IBX®) and partner
data centers across 35 metro areas in North America, Europe and
Asia-Pacific. Learn more at: www.equinix.com.
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.
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 and
adjusted 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 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 non-cash stock-based
compensation expense as it 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. 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 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, which can be found in Equinix’s quarterly earnings
releases.
Equinix does not provide forward-looking guidance for certain
financial data, such as depreciation, amortization, accretion, 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 it was calculated in prior quarterly earnings
releases.
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