Equinix Beats on Higher Revenues - Analyst Blog
July 29 2011 - 6:30AM
Zacks
Equinix Inc.
(EQIX) reported second quarter 2011
earnings per share of 64 cents, comprehensively beating the Zacks
Consensus Estimate of 57 cents.
Revenues
Revenues in the reported quarter
were $394.9 million, up 33.0% from the year-ago quarter and 9.0%
from the previous quarter. Quarterly result included $11.7 million
in revenues from the newly acquired ALOG data centers. Recurring
revenues, consisting primarily of colocation, interconnection and
managed services, were $376.5 million in the second quarter, a 9%
increase over the previous quarter and a 33% increase over the
prior-year quarter. Non-recurring revenues were $18.4 million in
the quarter.
Solid market fundamentals such as
the growth of IP, mobile, video, cloud and electronic trading
combined with the company’s global leadership position will likely
drive profitability over the long term.
Operating
Results
Cash gross margin (excluding
depreciation, amortization and including stock-based compensation)
in the quarter was 65.0% versus 66.0% in the sequentially preceding
quarter and remained unchanged from the year-ago quarter. Total
operating expenses increased 11.9% from the year-ago quarter and
7.52% from the previous quarter.
The year-over-year increase in
operating expenses was primarily attributed to higher selling and
marketing expenses (up 28.2%) and general and administrative
expenses (up 21.2%). Adjusted EBITDA, defined as income or loss
from operations before depreciation, amortization and accretion,
stock-based compensation, restructuring charges and acquisition
costs, in the second quarter was $181.3 million, up 8.0% from the
previous quarter and 37.0% from the earlier-year quarter.
Reported net income in the quarter
was $30.7 million or 64 cents per diluted share versus a net loss
of $2.3 million or 5 cents per share in the year-ago quarter.
One-time items in the quarter were negligible.
Balance Sheet & Cash
Flow
The company generated cash from
operating activities of $140.3 million in the second quarter
compared with $117.8 million in the previous quarter. As of June
30, 2011, cash, cash equivalents and investments were $423.1
million versus $456.7 million in the earlier quarter. In July 2011,
the company received net proceeds of approximately $735.6 million
from the 7.00% senior notes offering.
Guidance
For the third quarter of 2011, the
company expects revenues in the range of $412.0 to $417.0 million.
Cash gross margin is expected to be approximately 65.0%. Cash
selling, general and administrative expenses are projected at
approximately $86.0 million. Adjusted EBITDA is expected between
$180.0 and $185.0 million. Capital expenditures are estimated
between $160.0 and $180.0 million, comprising approximately $30.0
million in ongoing capital expenditures and $130.0 to $150.0
million in expansion capital expenditures.
For fiscal 2011, revenues are
expected to be roughly $1,590.0 million. Cash gross margin is
expected to range between 65.0% and 66.0%. Cash selling, general
and administrative expenses are expected to approximate $320.0
million. Adjusted EBITDA is projected at $720.0 million. Capital
expenditures are expected in the range of $645.0 to $665.0 million,
comprising approximately $115.0 million in ongoing capital
expenditures and $530.0 to $550.0 million in expansion capital
expenditures.
Our Take
Equinix is one of the leading
providers of co-location services and is well positioned to drive
significant growth going forward. The company has delivered strong
second quarter results and provided a decent guidance for the
fiscal year. We believe further growth in client base and
strategic acquisitions will enhance the company’s revenue potential
and expand its geographic reach.
Moreover, we are encouraged by
Equinix’ effort to expand the current facilities and maintain its
fiscal discipline. We are also positive about its recurring revenue
model. Despite all the positives, competitive treats from the likes
of AT&T Inc. (T) and Verizon
Inc. (VZ) raise our apprehension. European exposure and
industry consolidation are also causes for concern.
Equinix holds a Zacks #3 Rank,
implying a short-term Hold rating.
EQUINIX INC (EQIX): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
Zacks Investment Research
Equinix (NASDAQ:EQIX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Equinix (NASDAQ:EQIX)
Historical Stock Chart
From Sep 2023 to Sep 2024