We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Equinix (EQIX) Up 8.3% Since the Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Equinix, Inc. (EQIX - Free Report) . Shares have added about 8.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Equinix posted better-than-expected first-quarter 2017 results, wherein both the top and the bottom line surpassed the Zacks Consensus Estimate and increased from the year-ago quarter.
The company’s adjusted funds from operations (AFFO) increased year over year to $4.14 per share, surpassing the Zacks Consensus Estimate of $3.54. The increase is mainly attributable to strong top-line growth and lower tax rate, partially offset by higher cost of revenues and share count.
AFFO is a non-GAAP financial measure generally used in the Real Estate Investment Trust (REIT) industry.
Quarter in Detail
Total revenue was $949.5 million, up 12.5% from the year-ago quarter, beating the Zacks Consensus Estimate of $945 million. This marked the 57th quarter of consecutive revenue growth. The year-over-year improvement was primarily driven by strong booking activity, Equinix's global platform, continued enterprise momentum and the acquisitions of Telecity and Bit-isle.
Equinix continues to witness strong demand for its cloud services from corporations interested in enhancing their networks. The company witnessed revenue growth across all three geographic regions and verticals. Robust growth in the global Colocation and Interconnection platforms gave a boost to the top line.
Moreover, solid performance in MRR (monthly recurring revenues) per cabinet, MRR churn rate (2.8%) and cross connect additions drove the top line. Recurring revenues came in at $898.4 million (95% of total revenue), up approximately 12.8% from the year-ago quarter. Non-recurring revenues surged 7.5% to $51.1 million (5% of total revenue).
Revenues from the three geographic regions increased on a year-over-year basis too. Revenues from the Americas, EMEA and Asia-Pacific were up 7.9%, 15.3% and 15.3% to $436.4 million, $314.8 million and $198.2 million, respectively.
Gross margin was 68% flat on a year-over-year basis, primarily due to increased cost of revenues as a percentage of sales. Total operating expenses increased 13.5% to $218.4 million. Also, as a percentage of revenues, operating expenses increased 20 basis points (bps) to 23%.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $427.6 million, up 12.3%. AFFO increased 44.9% to $304.1 million. On a per-share basis, AFFO was $4.14 during the quarter.
Balance Sheet & Cash Flow
Equinix exited the quarter with cash, cash equivalents and short-term investments of $4.938 billion. The company’s total debt principal outstanding was $9.27 billion as on Mar 31, 2017. It generated cash of $247.4 million from operating activities in the first quarter.
Guidance
Equinix provided second-quarter guidance and lowered its full-year 2017 projections. For 2017, Equinix expects revenues to be more than $3.976 million, down from previous guidance of more than $3.993 billion. The company now predicts adjusted EBITDA of more than $1.860 billion (prior guidance was more than $1.842 billion).
However, the company lowered its AFFO guidance for full-year 2017. Equinix now anticipates AFFO to be more than $1.214, reflecting an increase of 13% year over year (previous guidance was more than $1.249, pointing at an increase of 16% year over year).
The company continues to expect cash gross margin for full-year 2017 to be approximately between 67% and 68%. Cash selling, general and administrative (SG&A) expenses are now projected in the range of $810–$830 million (previous guidance was $805–$825 million).
For the second quarter, Equinix expects revenues in the range of $976–$982 million (mid-point $979 million). The Zacks Consensus Estimate of $974 million. Adjusted EBITDA is likely to be $447 million to $453 million.
Cash gross margin for second quarter is anticipated to be approximately between 67% and 68%. Cash selling, general and administrative (SG&A) expenses are projected in the range of $206–$212 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.
At this time, the stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. Following the exact same course, the stock was allocated also a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Equinix (EQIX) Up 8.3% Since the Last Earnings Report?
A month has gone by since the last earnings report for Equinix, Inc. (EQIX - Free Report) . Shares have added about 8.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Equinix Q1 AFFO & Revenues Beats Estimates; View Weak
Equinix posted better-than-expected first-quarter 2017 results, wherein both the top and the bottom line surpassed the Zacks Consensus Estimate and increased from the year-ago quarter.
The company’s adjusted funds from operations (AFFO) increased year over year to $4.14 per share, surpassing the Zacks Consensus Estimate of $3.54. The increase is mainly attributable to strong top-line growth and lower tax rate, partially offset by higher cost of revenues and share count.
AFFO is a non-GAAP financial measure generally used in the Real Estate Investment Trust (REIT) industry.
Quarter in Detail
Total revenue was $949.5 million, up 12.5% from the year-ago quarter, beating the Zacks Consensus Estimate of $945 million. This marked the 57th quarter of consecutive revenue growth. The year-over-year improvement was primarily driven by strong booking activity, Equinix's global platform, continued enterprise momentum and the acquisitions of Telecity and Bit-isle.
Equinix continues to witness strong demand for its cloud services from corporations interested in enhancing their networks. The company witnessed revenue growth across all three geographic regions and verticals. Robust growth in the global Colocation and Interconnection platforms gave a boost to the top line.
Moreover, solid performance in MRR (monthly recurring revenues) per cabinet, MRR churn rate (2.8%) and cross connect additions drove the top line. Recurring revenues came in at $898.4 million (95% of total revenue), up approximately 12.8% from the year-ago quarter. Non-recurring revenues surged 7.5% to $51.1 million (5% of total revenue).
Revenues from the three geographic regions increased on a year-over-year basis too. Revenues from the Americas, EMEA and Asia-Pacific were up 7.9%, 15.3% and 15.3% to $436.4 million, $314.8 million and $198.2 million, respectively.
Gross margin was 68% flat on a year-over-year basis, primarily due to increased cost of revenues as a percentage of sales. Total operating expenses increased 13.5% to $218.4 million. Also, as a percentage of revenues, operating expenses increased 20 basis points (bps) to 23%.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $427.6 million, up 12.3%. AFFO increased 44.9% to $304.1 million. On a per-share basis, AFFO was $4.14 during the quarter.
Balance Sheet & Cash Flow
Equinix exited the quarter with cash, cash equivalents and short-term investments of $4.938 billion. The company’s total debt principal outstanding was $9.27 billion as on Mar 31, 2017. It generated cash of $247.4 million from operating activities in the first quarter.
Guidance
Equinix provided second-quarter guidance and lowered its full-year 2017 projections. For 2017, Equinix expects revenues to be more than $3.976 million, down from previous guidance of more than $3.993 billion. The company now predicts adjusted EBITDA of more than $1.860 billion (prior guidance was more than $1.842 billion).
However, the company lowered its AFFO guidance for full-year 2017. Equinix now anticipates AFFO to be more than $1.214, reflecting an increase of 13% year over year (previous guidance was more than $1.249, pointing at an increase of 16% year over year).
The company continues to expect cash gross margin for full-year 2017 to be approximately between 67% and 68%. Cash selling, general and administrative (SG&A) expenses are now projected in the range of $810–$830 million (previous guidance was $805–$825 million).
For the second quarter, Equinix expects revenues in the range of $976–$982 million (mid-point $979 million). The Zacks Consensus Estimate of $974 million. Adjusted EBITDA is likely to be $447 million to $453 million.
Cash gross margin for second quarter is anticipated to be approximately between 67% and 68%. Cash selling, general and administrative (SG&A) expenses are projected in the range of $206–$212 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.
Equinix, Inc. Price and Consensus
Equinix, Inc. Price and Consensus | Equinix, Inc. Quote
VGM Scores
At this time, the stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. Following the exact same course, the stock was allocated also a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.